to the point: financial regulation | 04/2025

·     The EBA has launched an ESG dashboard that introduces a standardised, EU-wide monitoring framework for climate-related risks in the banking sector, based on Pillar 3 ESG disclosures. For banks operating within the EU/EEA, this marks a significant development in supervisory expectations regarding transparency and consistency in climate risk reporting. The new indicators highlight banks' exposures to both transition and physical climate risks, such as lending to carbon-intensive sectors or properties vulnerable to environmental hazards. They also measure alignment with the EU Taxonomy, with key metrics like the Green Asset Ratio (GAR) remaining low across the sector, reflecting the early stage of green economic transition. While no new reporting obligations are introduced at this stage, the dashboard sets a clear benchmark for how banks' climate risk data will be assessed by regulators and the public, thereby increasing the pressure on institutions to improve the quality, granularity and comparability of their ESG disclosures.

·       The Council has approved a negotiating mandate to amend the InvestEU regulation and officially adopted the Stop-the-clock directive, both aimed at simplifying EU legislation and improving competitiveness. The amendments to the InvestEU regulation are designed to unlock around EUR 50bln in additional investments by increasing the EU guarantee and facilitating the integration of funding from legacy programmes such as EFSI, CEF and InnovFin. Additionally, the revised rules will reduce the administrative burdens on SMEs and small-scale operations by simplifying reporting requirements, particularly for operations under EUR 100,000, and moving from semi-annual to annual reporting. The definition of SMEs will also be updated to streamline eligibility criteria, with expected cost savings of EUR 350m in administrative burdens. The Stop-the-clock directive, which is part of the Omnibus I simplification package, addresses the regulatory pressure on businesses by postponing critical sustainability requirements. The directive delays the implementation of the Corporate Sustainability Reporting Directive (CSRD) by two years for large companies that have not yet started reporting, as well as for listed SMEs, while also extending the transposition deadline and initial application of the Corporate Sustainability Due Diligence Directive (CSDDD) by one year for the largest companies. This provides businesses with additional time to prepare for complex sustainability compliance tasks and allows EU legislators to consider necessary revisions to these directives.

·         The ESMA has published or updated the following Q&As:

• European crowdfunding service providers for business (ECSPR): Bulletin Board - Disclosure obligations (point (b) of Article 25(3) of the ECSPR) (2501) and Assessment of the entity to be considered as the project owner (2502);
• Markets in Crypto-Assets Regulation (MiCA): Registered AIFM and MICA (2397) and Autotrading (2463).

·       The ESMA has issued new guidelines aimed at helping national regulators detect and prevent market abuse in the crypto sector under MiCA. For obliged persons and entities, these rules introduce clearer expectations for compliance with anti-manipulation and anti-insider trading measures, drawing from existing practices under the Market Abuse Regulation but adapted to the unique dynamics of the crypto market, such as its cross-border reach and reliance on social media. The guidelines call for risk-based, proportionate supervision by National Competent Authorities (NCAs), and anticipate stronger regulatory engagement with the industry. Though formally applicable three months after their EU-wide publication, the ESMA urges early adoption, signalling that obliged entities should promptly align their internal compliance procedures, monitoring tools and reporting mechanisms with the evolving supervisory standards for crypto market conduct.

·       The EBA has published new draft Regulatory Technical Standards (RTS) that clarify when crypto-asset service providers (CASPs) operating cross-border within the EU must appoint a central contact point (CCP) to support anti-money laundering and counter-terrorist financing (AML/CFT) efforts. For CASPs offering services in Member States where they are not headquartered, these new rules introduce a clearer framework for compliance with local AML/CFT obligations. When a CASP has a physical presence in another Member State, such as through crypto ATMs or service hubs, they may be required to designate a CCP to act as a liaison for local supervisory authorities and ensure effective oversight. While the RTS do not prescribe the legal structure or location of the CCP, they outline the conditions triggering the obligation and define the CCP's responsibilities in facilitating regulatory communication and compliance. As a result, CASPs operating across borders will need to assess their activities to determine whether a CCP is required and ensure they have the necessary governance structures in place to meet this new compliance expectation.

·       The ESMA has published new Regulatory Technical Standards (RTS) and final Guidelines (GL) on Liquidity Management Tools (LMTs), aiming to enhance the ability of EU fund managers to manage liquidity risks, especially during times of market stress. For obliged entities such as fund managers operating under the AIFMD and UCITS Directives, these new rules clarify the practical use and implementation of LMTs, including side pockets, which previously lacked consistent regulation across Member States. The measures will harmonise liquidity management practices throughout the EU, ensuring that tools like redemption gates, swing pricing and side pockets are uniformly available and correctly applied. Fund managers will be required to adapt their internal liquidity frameworks and operational policies in line with these updated standards. Existing funds will have a 12-month transition period from the entry into force of the RTS to become compliant with the Guidelines. Overall, the rules enhance preparedness for liquidity shocks, strengthen investor protection and support financial stability in the non-bank financial sector.

·       The ESMA has finalised new Regulatory Technical Standards (RTS) under MiFID II, clarifying how investment firms must design, apply and monitor their order execution policies to ensure better investor protection and more consistent regulatory practices. For obliged entities, namely investment firms executing client orders, these rules introduce detailed requirements on classifying financial instruments, selecting appropriate execution venues and implementing robust monitoring procedures to assess the effectiveness of their execution arrangements. The RTS also establishes expectations for handling client orders executed through the firm's own account and prescribes how firms should respond to specific client instructions.

·       The ESMA has published a final report containing draft technical standards as part of the MiFIR Review. The new rules aim to simplify and reduce the burden on financial market participants, particularly focusing on three key areas. First, the application of the single volume cap and transparency calculations will be streamlined by phasing out daily reporting of transparency data for trading venues and Approved Publication Arrangements (APAs). This is expected to reduce administrative burdens for obliged entities involved in market transparency. Second, a new regime for Systematic Internalisers (SIs) will harmonise the notification content and clarify the procedures for investment firms acting as SIs, simplifying the compliance process. Finally, rules on circuit breakers and operational resilience for trading venues will streamline the setting of circuit breakers and the related public disclosure requirements, aligning with the DORA framework to enhance operational clarity. These changes are designed to provide trading venues with better legal certainty while ensuring the consistent application of MiFIR Review rules.

·       The ESMA has launched a consultation on the remaining Regulatory Technical Standards (RTS) for external reviewers under the European Green Bonds Regulation. These RTS focus on ensuring that external reviewers have appropriate systems, resources and expertise to carry out their work effectively, with an emphasis on sound administrative procedures, internal controls and the reliability of information sources used in reviews. For obliged entities, particularly external reviewers of green bonds, these new rules will introduce stricter standards for qualifications, operational procedures and compliance. They will be required to maintain robust internal controls and accurate reporting systems, as well as to inform regulators of any material changes to their registration details. External reviewers operating under the transitional regime or intending to apply for registration with the ESMA are encouraged to participate in the consultation, which will shape the final technical standards expected to be adopted by December 2025.

·      The series of implementing rules of the MiCA regulation was published in the Official Journal of the European Union. Among these newly introduced rules are provisions detailing the required information for applications seeking authorisation to provide crypto-asset-related services, as well as regulations establishing standard forms, templates and procedures for submitting these applications.

·     The EBA has published an updated list of risk assessment indicators and a revised methodological guide, clarifying how key risk metrics are calculated without imposing new reporting obligations on obliged entities. For financial institutions and competent authorities, the updated indicators, aligned with EBA reporting framework version 4.0, enable more consistent and comparable evaluations of profitability, solvency, operational risk, ESG factors and compliance with new requirements under the CRR3/CRD6  Banking Package and the MREL framework. This update is particularly relevant for banks, as it shapes how supervisors interpret reported data in risk assessments, meaning obliged institutions must ensure their internal reporting and risk management systems reflect the definitions and methodologies set out in the updated guidance.

·       The Czech Government is currently reviewing a Draft Act (in Czech only) that aims to amend national legislation in order to transpose Directive (EU) 2023/2673 on distance contracts for financial services, which updates existing EU rules and repeals the earlier Directive 2002/65/EC. The proposed changes affect the Civil Code, which currently governs distance financial services contracts, and are intended to align Czech law with the revised EU framework. For obliged persons and entities, particularly those offering financial services online, the new rules introduce stricter requirements for pre-contractual disclosures, clearer rights of withdrawal and enhanced consumer protections in digital settings. A notable change is the introduction of a mandatory "withdrawal button" for all online consumer contracts, including non-financial ones, aimed at simplifying contract termination. These amendments will primarily affect providers operating in areas without specific sectoral regulation or where existing laws have excluded certain protections, reinforcing the role of the Directive as a regulatory "safety net". The Act is expected to come into force on 19 June 2026, in accordance with the EU deadline.