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November 2, 2020 | less than a minute read

SFDR Level 2 Delay confirmed and FCA implementation update

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Raza Naeem

Partner

Get in touch

Raza Naeem

Partner

The formal decision by the Commission to delay the SFDR RTS has now been published in a letter to the ESAs (which is more or less the same as the letter that was previously leaked to trade associations). This means that firms will be in the unhelpful position of having to comply with the SFDR Level 1 rules in principle, but without the benefit of the Level 2 rules (which they would still need to be mindful of in their 10 March 2021 implementation).

In other news, the FCA has also confirmed via trade associations that it will not be onshoring the SFDR into UK law for 10 March 2021 - rather we need to look out for a new FCA regime that they will likely consult on in the new year. This means that UK firms don't need to comply with the SFDR - however they will likely be indirectly impacted if they have affiliates or clients that are subject to the EU rules and will be directly impacted if they market their funds into Europe under the AIFMD Article 42 regime.

Therefore, all application dates are being maintained as laid down by the Regulation with effect from 2021 so financial market participants and financial advisers subject to the Regulation will need to comply with its high level and principle based requirements from that time. In order to provide financial market participants and financial advisers adequate time for implementation, the regulatory technical standards will become applicable at a later stage. This will also allow national competent authorities, as designated in accordance with the sectoral legislation referred to in Article 6(3) of the Regulation, and in accordance with Directive 2013/36/EU, to prepare for the orderly and effective supervision of compliance by financial market participants and financial advisers with the requirements of the framework.