INVESTMENT SERVICES & CAPITAL MARKETS
MIFID and MIFIR
Consolidated Tape Providers brought into scope of ESMA rules for data reporting service providers (DRSP) fines and fees
On 7 May 2025, the European Commission adopted delegated regulations amending the rules for data reporting service providers (DRSP) fines and fees to include consolidated tape providers (CTPs) in scope.
Previously, the relevant requirements had only been applied to two types of DRSPs: approved publication arrangements and approved reporting mechanisms. The amendments are in line with the changes brought in as a result of the EU MIFID/MIFIR review changes which focussed on enhancing market data transparency and removing obstacles to the emergency of CTPs in the EU.
Delegated Regulation (EU) 2025/2691 amends Delegated Regulation (EU) 2022/803 specifying rules of procedure for the exercise of the power to impose fines or periodic penalty payments on data reporting service providers (DRSPs) by ESMA.
Delegated Regulation (EU) 2025/2687 amends Delegated Regulation (EU) 2022/930 regarding fees relating to the supervision of consolidated tape providers (CTPs) by ESMA. ESMA charges fees to DRSPs to cover its necessary expenditure relating to authorisation and supervision of DRSPs. The regulation introduces a fixed one-off authorisation fee per CTP of EUR100,000, which is a higher fee than the fee applied to other DRSPs due to the complexity of the authorisation process of CTPs. That fee is lowered to EUR50,000 where an authorised CTP applies for authorisation to provide data reporting services in respect of a different asset class. Annual supervisory fees for CTPs will use broadly the same methodology as used for other DRSPs. ESMA will monitor CTPs’ revenues on an ongoing basis to ensure a proportionate approach that does not jeopardise their business viability and is in principle in line with the full cost recovery principle.
The regulations will enter into force on the twentieth day following publication in the Official Journal of the European Union.
ESMA asks input on the retail investor journey as part of simplification and burden reduction efforts
On 21 May 2025, ESMA launched a Call for Evidence on the retail investor journey under MIFID II.
As part of broader efforts to support efficient simplification and burden reduction measures, ESMA launched this work to assess whether current rules support or hinder retail investor participation, and to explore if simplifications could help investors better engage with capital markets without weakening existing protections. The purpose of this Call for Evidence is to gather feedback from stakeholders to better understand how retail investors engage with investment services, and whether regulatory or non-regulatory barriers may be discouraging participation in capital markets.
The Call for Evidence explores:
- key retail market trends, such as the appeal of speculative products for younger investors and the influence of social media on investment decisions;
- the practical application of MIFID II requirements in areas such as regulatory disclosures, assessment of suitability and appropriateness; and
- additional areas such as the investor experience under the European crowdfunding framework and broader reflections on how to strike the right balance between investor protection and enabling informed risk-taking.
Alongside the Call for Evidence, ESMA also publishes a summary of the main points, translated into all EU languages to facilitate responses from consumers and their representatives.
The Call for Evidence is open till 21 July 2025. Based on the responses, ESMA, together with National Competent Authorities, will assess whether specific regulatory adjustments or clarifications may be needed to enhance investor protection and retail engagement in financial markets.
Market abuse
ESMA delivers technical advice on market abuse and SME Growth Markets as part of the Listing Act
On 7 May 2025, ESMA published its advice to the European Commission to support the Listing Act’s goals to simplify listing requirements, enhance access to public capital markets for EU companies, and improve market integrity.
In relation to Market Abuse Regulation (MAR), the advice covers:
- Protracted processes, identifying key moments for public disclosure;
- Delayed public disclosure, listing situations where delays are not allowed; and
- Cross-Market Order Book Mechanism (CMOB), indicating the methodology for the identification of trading venues with significant cross-border activity.
Regarding MIFID, ESMA focuses on the review of the requirements for multilateral trading facilities and segments for the purpose of registration as an SME growth market (SME GMs).
The technical advice facilitates the effective implementation of the Listing Act, by advising the European Commission on the delegated acts to be adopted and amended in relation to MAR and MIFID respectively.
The European Commission will adopt the delegated acts for which the technical advice was requested by July 2026.
ESMA continues its work to facilitate the effective implementation of the Listing Act. More information can be found on the dedicated webpage.
CSDR
Securities settlement: member states agree position on shorter settlement cycle T+1
On 7 May 2025, the Council of the European Union approved its position on the European Commission’s proposal regarding a shorter settlement cycle, shortening the settlement period under CSDR from two business days after trading takes place (T+2) to one business day (T+1), with the aim of promoting settlement efficiency, improving the liquidity of capital markets and eliminating costs linked to the misalignment of settlement cycles between the EU and other jurisdictions.
The Council amended the original Commission proposal by exempting securities financing transactions (SFTs) from the settlement cycle requirement. SFTs are financial transactions that allow investors and firms to use assets, such as the shares or bonds they own, to secure funding for their activities.
The Council decided on their exemption from the T+1 settlement cycle because of their non-standardised nature and the non-standardised settlement periods that may need to be agreed to by the parties to such transactions to achieve their objectives.
In order to avoid any risks of circumvention of the T+1 settlement cycle requirement, the exemption should only apply if SFTs are documented as single transactions composed of two linked operations.
Following this approval, trilogue negotiations with the European Parliament will begin. Once agreed, the new rules will apply from 11 October 2027.
On 20 May 2025, the European Parliament’s Committee on Economic and Monetary Affairs adopted a proposal to amend the Central Securities Depositories Regulation (CSDR), introducing a shorter settlement cycle for transferable securities transactions within the EU, with related press release.
The ECON proposal includes a requirement for ESMA to publish a report on settlement efficiency during the move to T+1 and on the feasibility of further shortening the settlement cycle to T+0. The final text will be subject to negotiations with the European Council which has already adopted its position (see item above).
The new regulation will apply from 11 October 2027.
Investor Protection
ESMA urges social media companies to tackle unauthorised financial ads
On 28 May 2025, ESMA communicated that it had, on this day, written to several social media and platform companies (X, Meta, TikTok, Alphabet, Telegram, Snap, Amazon, Apple, Google, and Reddit) encouraging them to take proactive steps to prevent the promotion of unauthorised financial services.
The increasing spread of online scams targeting retail investors poses a serious risk to investors themselves and to society, with fraudulent actors exploiting digital platforms to advertise unlawful financial services. These activities often mislead consumers into engaging with firms that lack proper authorisation, resulting in financial losses and in the loss of trust in the financial sector.
This approach complements last week’s initiative launched by the International Organization of Securities Commissions, highlighting the global nature of doing online harm linked to financial misconduct.
EMIR 3
Corrigendum to EMIR 3 clarified counterparty risk rules for Money Market Funds
On 26 May 2025, a corrigendum to Regulation (EU) 2024/2987, known as EMIR 3, was published in the Official Journal of the European Union.
One of the changes EMIR 3 made was to amend the Money Market Funds Regulation (MMF Regulation) by adjusting the rules addressing counterparty risk in financial derivative transactions to take account of whether a transaction is cleared by an EU authorised or recognised CCP.
The corrigendum makes a change to those adjusted rules by clarifying that in Article 17 of the MMF Regulation, it is the cash provided, rather than the cash received, by a Money Market Fund (MMF) as part of each reverse repurchase agreement that must not exceed 15% of the assets of the MMF.
PRIIPS
Consolidated Q&A on PRIIPs KID published
On 5 May 2025, the Joint Committee of the European Supervisory Authorities (ESAs) published a consolidated Q&A on the EU packaged retail and insurance-based investment products (PRIIPs) key information document.
The consolidated document combines responses given by the European Commission in relation to interpretation of Union law with responses given by the ESAs in relation to the application or implementation of the PRIIPs legislation. The Q&A take into account amendments to the legislation made by Commission Delegated Regulation (EU) 2021/2268. The consolidated Q&A also includes three new Q&As as of 5 May, which relate to: (i) MRM class determination; (ii) performance scenarios; and (iii) calculation of the summary cost indicators.
SUSTAINABLE FINANCE
Sustainable Finance Disclosure Regulation
European Commission call for evidence for the revision of SFDR
On 2 May 2025, the European Commission published a call for evidence to inform the revision of the Sustainable Finance Disclosure Regulation (SFDR), which is planned for Q4 2025.
The focus of the review will be to address burdens (including regulatory reporting burdens) and simplify and streamline requirements. This call for evidence follows a previous assessment of the SFDR, which included both a targeted and a public consultation, and will inform an impact assessment to support the review of the regulation.
To date, feedback on the SFDR has identified areas for improvement, including: (i) legal certainty on key concepts; (ii) relevance of certain disclosure requirements; (iii) overlaps and inconsistencies with other sustainable finance requirements; and (iv) issues in relation to data availability.
In addition, there is broad support for a revised SFDR that would (i) cater for different types of investor and financial product; (ii) facilitate retail investor understanding; (iii) consider international reach and exposure; and (iv) direct investment towards diverse sustainability-oriented aims while avoiding greenwashing.
In terms of broader impact, by improving clarity and consistency and addressing data-availability issues, the review should reduce operational and compliance costs, to achieve the objectives of the legislation, and facilitate sustainable investing. The deadline for comments is 30 May 2025.
CySEC DEVELOPMENTS
Circular C704: Analytical Guidance on Sustainable Finance Regulatory Framework-Investment Fund Managers Perspective
On 2 May 2025, CySEC issued Circular C704 (‘the Circular’) to provide Regulated Entities with information and guidance on the relevant regulatory framework and recent developments on Sustainable Finance, as well as outline key supervisory expectations, while taking in mind the findings of the relevant CySEC supervisory exercise undertaken during 2023 and 2024 on a sample of Regulated Entities within the context of the Common Supervisory Action.
At the ESMA level, Environmental, Social, and Governance (ESG) disclosures have been designated as a Union Strategic Supervisory Priority for the years 2023 to 2025. Within the Investment Management sector, ESMA and Member States have jointly placed the integration of ESG factors and greenwashing among the top supervisory priorities. In June 2023, ESMA published a Progress Report on Greenwashing, outlining the common high-level understanding of greenwashing and identifying parts of the Sustainable Investment Value Chain that are most vulnerable to greenwashing risks. Following a request from the European Commission, ESMA published its Final Report on Greenwashing in June 2024, restating the earlier understanding and offering a forward-looking perspective on how sustainability-related supervision can be gradually enhanced in the future.
The Circular provides an overview of the key legislation relevant to Sustainable Finance, defines its scope of applicability and highlights key supervisory expectations. Please refer to Sections II and III of the Circular for more information.
In Section IV, CySEC outlines key obligations and concepts introduced under Sustainable Finance Disclosures Regulation Level 1 (SFDR-1), further supported by the Taxonomy Regulation and further clarified by the supplementing SFDR Level 2. Some key obligations and concepts identified under SFDR are website disclosures, pre-contractual disclosures, periodic reporting requirements, and consistency between marketing communications and disclosed information. Additional information in relation to the abovementioned is provided in Section IV of the Circular.
CySEC goes further to explain that pursuant to the applicable legal framework Fund Managers are required to adapt their practices, as well as their internal policies and procedures in order to integrate sustainability risks into their organisation and operations, regardless of whether they manage ESG-related funds or not. In this regard, the Circular provides an overview in Section V of the operational obligations imposed to Investment Fund Managers.
Additionally, CySEC emphasises that the European Union is strongly promoting the effective integration of ESG factors across the financial sector. The continuously evolving ESG regulatory framework serves as a key tool to support the Green Deal and is expected to have an influence on how companies are assessed by investors and consumers. Hence, CySEC considers that it is critical for financial market participants to allocate sufficient human and financial resources to assist in the integration and management of the ESG aspect of their organisations.
Moreover, CySEC urges Regulated Entities to pay close attention to the content and implications of the EU Taxonomy Regulation and on the content of SFDR-1 and SFDR-2, as amended from time to time, and addresses the European Commission’s considerations of reviewing the SFDR and publishing a proposal during 2025.
Finally, CySEC expects Regulated Entities to fully comply with the provisions of this Circular and ensure the implementation and enhancement of ESG policies and procedures within their organisations and investment funds, while also ensuring compliance with their obligations in relation to sustainability risks and disclosures.
Circular C707: Council of Europe and European Commission, Directorate General for Structural Reform Support training course titled ‘Undertaking Due Diligence to determine possible links between legal entities and designated individuals: Beneficial Ownership and Control Considerations’
On 19 May 2025, CySEC issued Circular C707 (‘the Circular’) to inform Regulated Entities of an upcoming training course titled “Undertaking Due Diligence to determine possible links between legal entities and designated individuals: Beneficial Ownership and Control Considerations”, organised by the Council of Europe and the European Commission, Directorate General for Structural Reform Support (DG REFORM).
The Training Course, scheduled for 22 May 2025 from 10:15 to 14:00 (Cyprus time), and held online.
Key focus areas of the course included:
- Enhancing the identification of beneficial ownership and control structures,
- Improving the use of open-source intelligence (OSINT) tools and practices,
- Supporting compliance with EU financial restrictive measures, particularly in the context of sanctions imposed in response to Russia’s aggression against Ukraine.
CySEC encouraged obliged entities to register and attend the session, considering its relevance for improving due diligence practices and sanctions compliance.