With the appointment this week of a new EU Commissioner for financial services (Portugal’s Maria Luís Albuquerque will take on the re-named role of ‘Commissioner for Financial Services and the Savings and Investment Union’), and against the background of Mario Draghi’s recent report on the future of European competitiveness (here and here), it’s a good time to look at what to expect at EU-level from a financial services perspective over the next few months.

Priorities for next EU Commissioner

The mission letter sent by Commission President Ursula von der Leyen to the incoming Commissioner this week highlighted key focus areas for the next 5 years.  Scaling-up sustainable finance (with a particular focus on transition finance and climate resilience) is emphasised: the letter notes the exploration of how to promote the categorisation of financial products and services with sustainability features as a key priority. Both ESMA’s recent opinion on the sustainable finance regulatory framework and the joint ‘own initiative’ opinion of the European Supervisory Authorities (ESAs) on the Sustainable Finance Disclosure Regulation had also recommended the introduction of a product categorisation system. Digital finance is a key theme, in particular the development of an open access framework and assessing the deployment of AI in the financial sector.   Reviving the securitisation markets is also mentioned – we’re expecting a consultation from the Commission in the coming weeks on possible changes to the EU Securitisation Regulation.  The ESAs have also been working on an ‘Article 44 report’ under that Regulation which is expected to look at the definition of securitisation in the Level 1 text, proportionality in investor due diligence and transparency requirements, how to facilitate issuance and investing in securitisation, and how to better facilitate cross-border transactions.  The mission letter also asked the incoming Commissioner to focus on the macroprudential aspects of non-bank financial institutions (NBFIs) – the Commission’s May 2024 consultation on macroprudential policies for NBFIs closes on 22 November 2024 (read our insights here).

While work will continue by the Commission and the ESAs to prepare Level 2 and Level 3 measures under key financial services mandates over the coming months (in particular MiCA, DORA, the new AML/CFT package and the EU Banking Package), a number of Level 1 measures (directives and regulations) actioned during the term of the last Commission still need to be finalised.

Directives/Regulations likely to be published in Official Journal in Q4 2024

Legislative proposals that were provisionally agreed in trilogues between the European Parliament and Council of the EU earlier this year, and subsequently voted on by the Parliament, have now started (or are about to start) going through final lawyer-linguistic revision stage before formal endorsement by the Council and publication in the Official Journal.

These include EMIR 3.0, the ESG Ratings Regulation, the Listing Act, the Directive that will amend Solvency II and the Directive that will establish a recovery and resolution framework for insurance and reinsurance undertakings.

In each case, we can expect to see these published in the Official Journal in Q4 2024.

Directives/Regulations where trilogues will start shortly

Trilogue negotiations on the following files are expected to begin in the coming weeks: the bank crisis management and deposit insurance (CMDI) proposal (read our insights here), the proposed changes to the EU Benchmarks Regulation (which would limit the registration and authorisation requirements, and most of the existing Regulation’s substantive requirements, to critical benchmarks, significant benchmarks, EU climate transition benchmarks, EU Paris-aligned benchmarks and certain commodity benchmarks), PSD3 (the planned new Payment Services Regulation and related Directive), and the retail investment package (read our insights here).

Other policy areas to watch

The journey towards a T+1 settlement cycle will also be closely monitored, with ESMA planning to submit a report to the Commission by mid-January 2025 on a potential move from T+2 to T+1.  A potential roadmap to T+1 in the EU, shared by ESMA at a public hearing in July 2024, envisaged a 3-year process which could lead to a move date of end-2027.  For more information, read our insights here and the presentations given by ESMA at that 10 July hearing here).

From a funding perspective, the Commission’s recent roundtable on commercial paper and certificates of deposit proved interesting – the Commission has become more aware of the capacity of short-term funding instruments as alternatives to other forms of credit and has been keen to understand what can be done to open-up these types of funding channels in the EU.  No short-term developments are expected on that point, but it is worth keeping an eye on.

We’ll continue to alert clients as developments occur, and our monthly Horizon Scanner: Finance will keep you informed about upcoming legal, regulatory and policy matters.