4 April 2025

EU Regulatory updates

A) Latest: EU policy, strategy

1. EC formally unveil new Savings and Investment Union strategy

“The development of a Savings & Investments Union is a crucial priority as it aims to improve the way the EU financial system channels savings to productive investment, creating a wider range of financial opportunities for people and businesses, notably sustainable businesses”.
Savings and Investments Union Communication [EU Commission, 19 March 2025].

The European Commission (EC) have now published their official strategy for a new ‘Savings and Investments Union’ (SIU). This is their latest attempt to encourage consumers to engage in EU capital markets; it supersedes their earlier ‘Capital Markets Union’ action plans (made in 2015 and 2020).

Subtitled “A Strategy to Foster Citizens’ Wealth and Economic Competitiveness in the EU”: the new SIU groups together policy measures and proposed actions across four inter-related headings, with key EC deliverables including:

i. Citizens and Savings

Q3-2025: EC will adopt measures to create “a European blueprint for savings and investments accounts or products”. They will also advise EU member states on how they should apply the respective tax treatment rules, ongoing.
Q3-2025: the EC will publish a financial literacy strategy to create an “investment savvy” culture.
Q4-2025: the EC will complete their review of existing EU frameworks for Institutions for Occupational Retirement Provision (IORPs) and the Pan-European Personal Pension Product (PEPP).

ii. Investments and Financing

Q4-2025: the EC will take measures to stimulate equity investments by both institutional investors, insurers and pension funds (e.g. amended Solvency II Level 2 criteria).

iii. Integration and Scale

Q2-2025: the EC will set up a ‘dedicated channel’ for all market participants “to report on encountered barriers” within the single market, while “accelerating their removal” via enforcement action;
Q4- 2025: the EC will propose legislation to simplify operations of asset managers and remove barriers to the distribution of EU-authorised funds across the EU.
Q4 2025: the EC will also publish an “ambitious package of legislative proposals” covering market trading infrastructure (amending rules on central securities depositories, collateral and settlement).

iv. Efficient Supervision in the Single Market

Q4-2025: the EC will publish plans to achieve a “more unified supervision of capital markets”, by “transferring certain tasks to the EU level” and how to strengthen ‘supervisory convergence tools’.

NB: the EC’s new SIU communication comes with a press release, a factsheet and a list of questions & answers.

They will also publish a mid-term review of the overall SIU progress in Q2-2027.

In the meantime, the EC say the future success of the SIU will require “collaborative efforts from all stakeholders, including EU member states, European Parliament, the private sector and civil society”. The implementation itself depends “on both legal and non-legal measures, including those be developed by the member states themselves.”

2. EC may “withdraw” Retail Investment Strategy as ‘trilogues’ begin

On 18 March, the EU co-legislators (European Commission, Parliament and Council) finally began their ‘trilogue’ discussions over the Retail Investment Strategy (RIS) adopted by the EC nearly 2 years ago.

Unfortunately, at the time of writing, there is no official statement regarding interim progress.

Meanwhile, the RIS is mentioned in the ‘Citizens and Savings‘ section of the new SIU communication. The EC say they will “remain vigilant” during the negotiations to agree finalised RIS legal texts (i.e. ‘Value for Money’ rules applied to UCITS, AIFM and MiFID Directives, plus a ‘modernised’ PRIIPs KID).

The preferred outcome is to “protect investors while minimising any associated regulatory burden”. This includes new disclosures rules “that offer information in a simple and easily understandable manner, and ultimately contribute tangibly to encouraging greater retail investor participation in the EU’s capital markets”.

NB: the EC say they “will not hesitate to withdraw the [RIS] proposal if the negotiations fail to meet the intended objectives of the Strategy”.

B) EU-sustainability updates

1. ESG ‘Omnibus’ package

a) Corporate Sustainability Reporting & Due Diligence Directives

Since the EC published their ‘Omnibus’ legal package to ‘simplify’ sustainability reporting to reduce corporate burdens by 25%, events are moving fast:

On 3 April, the EU Parliament heavily endorsed the proposal to “stop-the-clock” on the implementation of major CSRD and CSDDD obligations until 2027-2028;
Work now begins on streamlining the content and scope of sustainability reporting and due diligence requirements;
The European Financial Reporting Advisory Group (EFRAG) have been mandated to simplify the current EU Sustainability Reporting Standards (ESRS) before 31 October;
The EC are expected shortly to issue a statement covering so-called ‘Wave 1’ companies, who fall outside the CSRD reporting deferral.

b) Taxonomy reporting

The EC’s consultation on their proposal to reduce EU-Taxonomy data points by 70% has attached many responses.

EFAMA say this will “significantly undermine the potential usefulness of the EU Taxonomy as one framework for reorienting cash flows towards more environmentally sustainable investments”;
The Platform on Sustainable Finance warn that reducing Taxonomy data availability will pose “significant challenges” to their future SFDR product categorisation model, especially the new ‘sustainable’ category.

2. Other key sustainability items

a) SFDR L1, L2 status

A reminder that while the Sustainable Finance Disclosure Regulation (SFDR) falls outside the EC’s ‘Omnibus’ legal package, EC resource constraints mean the results of their SFDR Level 1 impact assessment (including future ‘SFDR II’ legal changes) will not appear until Q4-2025 (at the earliest).

Separately, there is still no sign if the EC will approve or reject the EU Supervisory Authorities’ extensive draft SFDR Level 2 RTS (delivered back in December 2023).

b) EU ESG-related fund name guidelines

The European Securities & Markets Authority (ESMA) recently published a ‘Compliance table’ showing all EEA regulators (apart from the Czech Nation Bank) now intend to enforce the Guidelines on funds’ names using sustainability-related terms, within their member states.

These will apply from 21 May for all EU products, to avoid use of “misleading” terms and reduce greenwashing risks.

NB: MSCI estimate the interim fund-renaming process has so far “shrunk the EU sustainability fund universe by 20%”.

C) Other EU updates

1. ESMA activity mop-up

a) Call for industry ‘vigilance’ amid rising geopolitical, cyber risks

“Ensuring resilience in the face of these developments is crucial”.
Risks and Vulnerabilities in the EU Financial System update [European Supervisory Authorities, 31 March 2025].

On Monday 31 March, ESMA co-presented an ‘Update on Risks and Vulnerabilities in the EU Financial System’ alongside the other EU Supervisory Authorities. They warn that “growing geopolitical tensions and rising cyber risks present significant challenges to financial stability”.

These include “trade disputes, rapidly shifting policies, ongoing international conflicts and the prospect of economic fragmentation which are reshaping global markets”; these require “requiring heightened vigilance and adaptability from supervisors and financial entities alike”.

Financial institutions must now “navigate growing uncertainties, including exposure to international markets, liquidity risks and the evolving role of artificial intelligence.”

NB: less than two days after this ESA update, the United States imposed 20% tariffs on all EU countries.

b) 2025 ESMA activity planning

ESMA have notified the EC about their list of delayed and deprioritised deliverables.

Notable 2025 deferrals within the full schedule (p.3-4) will include:

AIFMD: RTS on open ended loan originating alternative investment funds [delayed until 16 Oct 2025]
UCITS/AIFMD: Guidelines to specify unfair, unclear or misleading fund names [delayed until 16 Apr 2026]
UCITS: Technical advice on Eligible Assets Directive [delayed until July 2025]
CBDF: Report on cross-border fund distribution marketing requirements [delayed until 31 Oct 2025].

Separately, ESMA confirmed a consultation paper on AIFMD/UCITS Integrated reporting will appear during Q2-2025.

c) Latest ELTIF register published

ESMA’s updated register of European Long-term Investment funds (ELTIFs) shows a total of 184 ELTIFs now authorised across six member states. So far, Luxembourg (117 funds) is the clear winner.

NB: a German-based research firm predict at least 80 new ELTIFs will come into the market in the next 12 months. They estimate a total sector EUR 65-70bn AUM, by end-2027 (i.e. at least three times larger than in 2024).

d) ESMA facilitates access, use of public register data

This month, ESMA published its first code package on the GitHub public code repository, with the goal of promoting the availability of ESMA’s data and facilitating its usage.

This follows the recent publication of ESMA’s first interactive dashboards, based on published MiFID data; this provides information on instruments and trading venues, per market type and country. Both initiatives are part of ESMA’s efforts “to provide relevant, useful, understandable information to the market in machine-readable form”.

e) Investors warned over AI use

ESMA also published a multi-language factsheet warning on the use of artificial intelligence for investing.

They advise to “always approach AI tools with caution and scepticism”, stressing these can “generate advice that could be inaccurate or misleading and that may result in poor investment decisions and significant financial losses”. Given the inherent AI risks and absence of regulatory obligations, ESMA urge investors to “consider relying on authorised professionals” for tailored advice and recommendations, while avoiding ‘get-rich-quick’ schemes.

2. EU Accessibility update

Following our previous synopsis on the European Accessibility Act (EAA), we understand the European Commission have acknowledged industry concerns at the lack of legal and practical guidance available to the fund managers (ahead of the 25 June 2025 deadline). The EC are said to be now looking into this matter, with a formal response expected, shortly.

More to follow.

D) Latest market trends, opinion

1. EU asset managers “have no playbook” to US tariffs

Global market volatility continues, following the US President’s sweeping imposition of tariffs on 2 April.

Ignites Europe recently quoted one senior director saying asset managers are “following the events with hawkish eyes …there is no playbook for this situation”. Another observes the tariffs had “induced market turmoil”, leaving fund firms “exposed”. Contingency plans are now said to be under preparation, across the industry.

2. EU “should apply tariffs on US services”

A former EU Trade chief has told Euronews the EU “must not waver in its response to the imposition of blanket US tariffs” in order to stop the trade war.

Jean-Luc Demarty favours deployment of the ‘Anti-Coercion Instrument’ (ACI), enacted by the EU in December 2023. Also known as “the bazooka”, the ACI enables a wide range of possible countermeasures, whenever a country refuses to remove an ‘economic coercion’. These include the imposition of tariffs, restrictions on trade in services and trade-related aspects of intellectual property rights, and restrictions on access to foreign direct investment and public procurement.

3. France, Luxembourg, diverge over SIU “shake-up”

As mentioned above, a key objective of the EC’s new Savings and Investment Union strategy is “more unified market supervision, including transferring certain tasks to the EU level” [e.g. ESMA, based in Paris].

This will prompt disagreement (and strong resistance) within certain EU member states.

The French Autorité des Marchés Financiers (AMF) have declared their support to “finally integrating EU supervision.” They suggest “a careful mapping of criteria triggering a transfer to ESMA’s supervision of large pan-European market infrastructures”, with new “colleges of supervision”.

However, the Luxembourg Finance Minister Gilles Roth told an ALFI conference “we need to maintain a decentralised European supervisory system, including the investment fund sector”. He said “Europe needed a supervisory system that leverages national expertise and avoids unnecessary bureaucracy. We will do whatever it takes to defend this approach.”

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Article written by Mark Kilbride [Regulatory Affairs Advisor, Kneip Product team].

Feel free to contact me at [email protected].