Welcome to the latest edition of KPMG Regulatory Horizons from KPMG's EMA Financial Services Risk & Regulatory Insight Centre (RRIC) – your ‘go to’ read for insights on financial services regulation from the perspective of the EMA region.
- ESAs set out their agendas: EBA, EIOPA and ESMA have each issued extensive work programmes for 2021 and beyond.
The ESAs’ work programmes all refer to the continuing impact of COVID-19 on their activities, protecting consumers and businesses, supporting sustainable finance and technological developments, cross-borders business and the ongoing uncertainty of Brexit. They also include commentary about the way in which the ESAs themselves are developing in the face of new and existing challenges.
- New EU digital finance package: The European Commission has issued a large and wide-ranging package of measures relating to digital finance.
The measures are intended further to enable and support the potential of digital finance in innovation and competition, while mitigating the risks.
- Retail payment: four pillars: The commission reveals its vision for retail payments.
Despite the wave of innovation around crypto-assets and DLT-based offerings, most new digital payment solutions are largely based on traditional cards or bank transfers, irrespective of whether the provider is a bank or fintech firm.
- CMU version 2: The European Commission has adopted a new Capital Markets Union action plan.
The commission notes progress since 2015, with 12 out of 13 legislative proposals implemented, but that EU capital markets remain fragmented.
- MIFID II: a two-stage review: MiFID II review takes shape.
In the May edition, we reported that the MiFID II/MiFIR review had been started but there was a way to go. There have since been considerable developments, particularly that updates to the directive and regulation are to be made in two stages.
- Financial and operational resilience for banks: Swift central bank and regulatory responses have been instrumental in supporting banks and their customers through the pandemic.
Some initial emergency measures have been unwound, some are nearing their end-dates and others continue or have been extended. Regulators face difficult decisions about the extent to which their actions can now support or impede the recovery. Meanwhile, the prudential agenda continues to expand into areas such as climate risk and digital resilience.
- Growing focus on product governance: Regulatory expectations of firms’ product governance processes are increasing.
ESMA and EIOPA are re-asserting the importance of robust product governance arrangements. The focus is shifting to upstream control, the impact of the pandemic and sustainable finance.