to the point: financial regulation | 07/2025

·    ESMA has published the following new Q&As:

• MiCA
  • Staking on own account (2607)
  • Pre-funding clients' orders with clients' crypto-assets (2608)
• UCITS
  • Performance fees for feeder funds (2609)

·       EBA, ESMA and EIOPA (ESAs) have published a non-binding guide outlining how they will conduct oversight of critical ICT third-party service providers (CTPPs) under the Digital Operational Resilience Act (DORA). For obliged entities – financial institutions relying on external ICT providers – this guide clarifies what to expect from the ESAs' Joint Examination Teams (JET) during supervisory activities. While not legally enforceable, the document gives financial entities and third-party providers insight into the oversight structure, governance and tools that will be used to ensure operational resilience. It signals that financial institutions must be prepared for greater scrutiny of their ICT supply chains and should start aligning their internal processes and vendor relationships with DORA requirements. The guide is intended to support preparation, not replace legal obligations, but it clearly indicates that entities must anticipate structured and coordinated EU-level oversight of their digital infrastructure.

·   The European Commission has adopted a Delegated Act that simplifies the EU Taxonomy reporting framework, aiming to reduce red tape for companies while maintaining core climate and environmental objectives. Non-financial companies will no longer be required to assess Taxonomy eligibility or alignment for economic activities that are financially non-material, defined as those comprising less than 10 % of their revenue, capital expenditure (CapEx) or operational expenditure (OpEx). They are also exempt from evaluating alignment for their full operational expenditure if it is not material to their business model. For financial institutions, indicators such as the green asset ratio (GAR) are simplified, and a two-year grace period is granted during which detailed Taxonomy key performance indicators (KPIs) are not required to be reported. Furthermore, reporting templates are drastically streamlined, reducing the data points required by 64 % for non-financial companies and 89 % for financial firms. Obliged entities will also benefit from simplified "do no significant harm" criteria in relation to pollution and chemical use.

·    ESMA has published its new guidelines, introducing clear, binding criteria for assessing the knowledge and competence of staff at crypto-asset service providers (CASPs) who provide information or advice under the MiCA Regulation. For obliged entities, this means they must ensure that their staff meet minimum standards of professional qualification and experience, particularly in relation to the specific risks of the crypto-asset market, such as volatility and cybersecurity. CASPs are now required to systematically assess and demonstrate that their personnel possess adequate understanding of crypto-assets and related services to protect clients and build trust in the market. Competent authorities will use these criteria to monitor compliance, and CASPs must be prepared to show that their internal procedures align with the guidelines. The rules will start applying six months after the official EU-wide publication, and competent authorities must notify ESMA within two months whether they intend to comply. This marks a concrete step toward more professionalised, accountable crypto-asset services across the EU, directly impacting how CASPs train, hire and evaluate their staff.

·    EBA has confirmed in its new report on the direct provision of banking services from third countries that no changes to Article 21c of the Capital Requirements Directive (CRD) are currently needed, but highlights areas where further clarification would benefit both authorities and market participants. For obliged entities, the report reinforces that core banking services cannot generally be provided directly into an EU Member State without establishing a local branch, unless specific exemptions apply, such as reverse solicitation, interbank or intragroup transactions, or MiFID-related services. While the current framework offers flexibility, the EBA points out that the interaction of Article 21c with other EU legislation like the UCITS and AIFMD frameworks remains unclear, particularly for entities that operate internationally and depend on ongoing core banking services from third countries to maintain their business models. Therefore, EU entities must carefully assess whether their existing relationships with third-country providers comply with the CRD rules and be prepared for possible further interpretative guidance, especially regarding investment fund operations.

·    The EBA's new final Guidelines on Acquisition, Development and Construction (ADC) exposures to residential property under the standardised credit risk approach introduce more favourable capital treatment for institutions, provided specific conditions are met, meaning that credit institutions subject to the Capital Requirements Regulation (CRR) may apply a reduced risk weight of 100 % instead of 150 % for qualifying ADC exposures, lowering capital charges and improving capital efficiency. To benefit from this, banks must ensure that at least 50 % of units are subject to qualifying pre-sale, pre-lease or lease contracts and that borrowers contribute at least 25 % equity in the project's value upon completion. Notably, the equity threshold has been reduced from the initially proposed 35 %, easing compliance while maintaining a risk-sensitive framework. For public housing projects, the guidelines introduce additional flexibility: they can satisfy demand-based conditions at the municipal level and meet a lower equity threshold of 20 %, with broader definitions of eligible equity including subsidies and grants. These changes require obliged entities to adapt their credit risk assessment procedures and due diligence processes to verify compliance with the new qualifying conditions if they wish to benefit from the more favourable risk weighting, thereby aligning internal practices with the EBA's prudential standards.

·   The EBA has submitted a new bundle of technical standards: 1. Technical standards on undertakings under dominant/significant influence or managed on a unified basis, 2. Technical standards on the relevance of cross-border activities of undertakings, 3. Implementing technical standards on the lists of regional governments and local authorities' exposures, and revised  Guidelines following the Solvency II review, which introduce important changes that directly affect how insurance undertakings are supervised and how they calculate capital requirements. For obliged entities, particularly insurance companies operating across borders or within groups, the new rules clarify the criteria used by supervisors to identify when an undertaking is under dominant or significant influence or managed on a unified basis, which will impact group supervision obligations. Undertakings with significant cross-border activities will now face more structured oversight, as host supervisors will apply defined criteria to assess their relevance for local markets, potentially increasing the supervisory scrutiny in those jurisdictions. Additionally, insurers holding exposures to certain regional and local authorities listed in the updated implementing standards will benefit from more favourable capital treatment, as those exposures are to be treated as equivalent to central government risk with a 0 % risk factor for spread and concentration risk. Finally, the revised guidelines on undertaking-specific parameters streamline the process for replacing standard formula parameters in capital calculations, reducing regulatory complexity while maintaining the existing approach. Obliged entities will need to reassess group structures, reporting lines and cross-border operations to ensure alignment with the new standards once they are adopted, and prepare for enhanced supervisory coordination under the updated Solvency II framework.

·    The Senate approved two key draft acts in the area of capital markets that implement EU regulations as part of the broader Capital Markets Union initiative. For obliged entities and persons, the new rules (ESAP Draft Act) (in Czech only) primarily introduce the Single European Access Point (ESAP) and revise obligations under MiFID II/MiFIR (Draft Act amending Capital Market Business Act) (in Czech only). ESAP will centralise financial and sustainability-related information into a publicly accessible and free platform, significantly impacting how entities disclose and manage data. In the pilot phase (effective 10 July 2026), entities must ensure accurate and timely reporting under the Transparency Directive, Prospectus Regulation and Short Selling Regulation. Later, from 2030, further standardisation and centralisation of existing disclosures will apply, without adding new content requirements. Entities will need to coordinate with the Czech National Bank or the Chamber of Auditors for data submission. The second Draft Act, amending the Capital Market Business Act, transposes updates to MiFID II and MiFIR, targeting greater transparency and easing the emergence of consolidated data providers. From 29 September 2025, obliged entities must adapt to new reporting, trading and transparency rules, requiring adjustments to internal systems and procedures to meet the redefined obligations efficiently.

·    PLN 800 million for investment loans (PR/RR/Z lines), PLN 13 million in interest subsidies, and PLN 8 million under the MRcsk line for young farmers purchasing agricultural land. The aim is to reduce financing costs for farm investments and land purchases by emerging farmers. This initiative enhances credit capacity in agricultural banking, reinforcing the role of cooperative and regional banks. It enables banks to expand their lending to infrastructure and green investment projects in rural areas, improving liquidity and broadening the institutional financing base.

·  The draft proposes, among other things: elimination of mutual counterclaims by banks in the same proceedings, abandonment of immediate enforceability of first-instance judgments, extending consumer protection to added parties and inheritors, and refined rules for court cost settlements. The proposal may significantly enhance predictability and speed in resolving FX-loan disputes, relieving banks from the burden of mass litigation and bolstering consumer confidence in legal redress. However, some measures—such as limiting counterclaims—also serve to protect bank interests by reducing financial exposure from prolonged court disputes.