LPA

Category: Asset Management

  • FCA Consultation on Incorporating MiFID Rules into the FCA Handbook

    FCA Consultation on Incorporating MiFID Rules into the FCA Handbook

    Lucht Probst Associates (LPA) is informing the market of the latest regulatory developments following the Financial Conduct Authority’s (FCA) publication of a consultation paper on the integration of firm-facing requirements from the MiFID Org Reg into the FCA Handbook. The initiative aims to ensure regulatory continuity while maintaining the existing substantive requirements for firms.

    Background of the Consultation

    The FCA’s consultation follows the UK Treasury’s policy paper outlining its next steps in reforming the UK’s MiFID framework, which was announced alongside the Mansion House speech. The MiFID Org Reg sets out conduct rules and organisational requirements to uphold market integrity and investor protection. The UK version of these rules currently applies directly to UK MiFID investment firms.

    In 2018, parts of the MiFID Org Reg were incorporated into the FCA Handbook to provide firms with a consolidated view of the relevant MiFID requirements. Additionally, some MiFID provisions were extended to non-MiFID firms, including ‘Article 3 firms’ under the optional exemption, ensuring that they adhere to similar conduct and systems requirements.

    Key Proposals

    The FCA proposes to replace firm-facing requirements from the MiFID Org Reg with Handbook rules as the Treasury initiates the repeal of the legislation. Where provisions are not incorporated into regulatory rules, they will either be restated or repealed by the Treasury, aligning with the implementation of the new Handbook rules. The Treasury will publish a draft Statutory Instrument to facilitate these changes.

    While the FCA aims to retain the substance of existing requirements, it invites feedback on potential reforms to better align conduct and organisational rules with the needs of UK-authorised firms and their clients. Chapter 4 of the consultation explores possible rationalisation and improvement of MiFID II-derived rules, including the framework for client categorisation.

    Impacted Market Participants

    A broad range of market participants will be affected by the proposed changes, including:

    MiFID investment firms, including credit institutions and collective portfolio management investment firms

    MiFID Article 3 firms (optional exemption firms)

    Third-country firms

    Undertakings for Collective Investment in Transferable Securities (UCITS) managers

    Operators of Residual Collective Investment Schemes (CIS) and small authorised UK Alternative Investment Fund Managers (AIFMs)

    Occupational Pension Scheme (OPS) firms

    Recognised investment exchanges (RIEs)

    Next Steps

    The FCA is seeking industry feedback by 28 February 2025 for the proposals in Chapter 3 and by 28 March 2025 for the discussion points in Chapter 4. Stakeholders are encouraged to respond via the FCA’s consultation portal. LPA will continue monitoring these regulatory developments and their implications for market participants. If you require further guidance on the FCA’s consultation or its potential impact on your business, please contact our regulatory experts.

  • LPA at Finanzplatztag 2025: Digitalisation, Regulation, and Market Opportunities for Asset Managers

    LPA at Finanzplatztag 2025: Digitalisation, Regulation, and Market Opportunities for Asset Managers

    The Finanzplatztag 2025, hosted by Börsen-Zeitung, once again highlighted the key challenges and opportunities facing the German and European financial markets. The main topics included the digital transformation of the industry, regulatory developments, and geopolitical risks. Sebastian Höft, Global Director of Sales Asset Management at LPA, attended the event to engage with industry experts and decision-makers, discussing future-oriented developments and showcasing LPA’s solutions for asset managers.

    Digitalisation as a Key Competitive Factor

    Discussions with Fabian Fischer (Bundesbank) and Valentin Roth (Upvest) emphasised that Germany must accelerate the digital transformation of its financial market to remain competitive on an international level. Automation and digital solutions play a crucial role in reducing regulatory and operational burdens.

    LPA addresses these needs with Capmatix AM:

    Automated document generation to reduce operational costs.

    Regulatory compliance solutions for efficient implementation of new requirements.

    Scalable digital processes to enhance productivity.

    Regulatory Developments: Efficiency Instead of Deregulation

    Regulation was a key topic at the event. Professor Dr Claudia Buch (ECB) highlighted the necessity of increasing regulatory efficiency without compromising financial market stability.

    Key aspects for asset managers:

    Further development of the Capital Markets Union to strengthen cross-border business.

    Investment in IT infrastructures to ensure operational resilience.

    High demands from CRR III and Solvency II require efficient RegTech solutions.

    With Capmatix AM, LPA supports asset managers in implementing regulatory requirements efficiently and reducing operational costs.

    Geopolitical Risks and Their Impact on the Financial Sector

    Geopolitical uncertainties and their influence on capital markets were another focal point. Discussions covered topics such as:

    The impact of geopolitical tensions on financing strategies.

    The necessity of a strategic evolution of the European financial market.

    Adaptation to changing Basel requirements for risk management.

    Through digital and automated compliance solutions, LPA provides asset managers with the necessary flexibility to respond effectively to these challenges.

    Competitiveness of Germany’s Financial Centre

    The panel discussion featuring Souâd Benkredda (DZ Bank), Dr Stephan Leithner (Deutsche Börse), Anja Mikus (KENFO), Dr Bettina Orlopp (Commerzbank), Tobias Vogel (UBS), and Stefan Wintels (KFW) addressed key questions concerning the future of Germany’s financial centre:

    Should Germany’s 1,200 banks consolidate to increase competitiveness?

    How can the European securitisation market be strengthened?

    What are the implications of new UCITS regulations and Solvency II for investments?

    Digital Assets & Blockchain: Opportunities and Regulatory Challenges

    The growing significance of digital assets and blockchain technologies was another major topic. Regulatory frameworks such as MiCAR and the eWpHG are establishing initial standards, but market penetration remains low.

    Key takeaways:

    Tokenised assets could introduce new financing options for SMEs.

    A more precise regulatory framework is needed to attract institutional investors.

    Technology-driven asset management solutions are crucial to unlocking the full potential of digital assets.

    Insightful discussions with Dr Duc Au, Michael Duttlinger, Dr Alexander Bechtel, Dr Johannes Schmitt, Christian Wölke, Constantin Lisson, Christian-Hendrik Knappe, and Regine Fischer-Wendland underscored the need for further innovation.

    Conclusion: Enhancing Efficiency as a Competitive Advantage for Asset Managers

    The discussions at Finanzplatztag 2025 highlighted that asset managers are facing increasingly complex regulatory and economic challenges. The key to success will be balancing efficiency improvements with market stability.

    With Capmatix AM, LPA offers a proven solution that:

    Automates regulatory processes and reduces costs,

    Enhances operational resilience through digital workflows,

    Helps asset managers adapt to regulatory and economic changes.

    As a leading company in RegTech and digital transformation, LPA supports its clients in successfully navigating an evolving financial landscape.

  • EU-Commission proposes simplifying rules on sustainability

    EU-Commission proposes simplifying rules on sustainability

    The European Commission has introduced a new set of proposals aimed at streamlining EU regulations, enhancing competitiveness, and increasing investment opportunities. This initiative marks significant progress in fostering a business-friendly environment that supports the growth, innovation, and job creation of EU companies.

    Sustainability reporting will be more accessible and efficient by streamlining requirements under the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. Key changes include:

    Narrowing the CSRD Scope: Around 80% of companies will be removed from CSRD obligations, limiting reporting to the largest firms with the most significant environmental and social impact.

    Protecting Smaller Businesses: Large companies reporting requirements should not have a negative impact on smaller companies in their value chain

    Postponing Reporting Deadlines: Companies currently under CSRD, set to report in 2026 or 2027 will have their deadlines extended by two years until 2028.

    Allowing Partial Taxonomy Alignment: Optional reporting on partially EU Taxonomy aligned activities to foster a gradual transition over time

    Introducing a Financial Materiality Threshold: Taxonomy reporting templates will be reduced by approximately 70%, simplifying compliance.

    Easing “Do No Significant Harm” (DNSH) Criteria: The most complex DNSH requirements, especially those related to pollution and chemical use, will be simplified.

    The European Commission is also streamlining sustainability due diligence requirements to reduce complexity and costs for businesses while ensuring responsible practices. Key changes include:

    Focusing on Direct Business Partners: Systematic due diligence will primarily apply to direct partners, with periodic assessments reduced from annually to every five years, except for necessary ad hoc reviews.

    Easing Burdens on SMEs: Large companies will have limited ability to request extensive information from SMEs and small mid-caps within their value chains.

    Adjusting Civil Liability Rules: The EU will remove specific civil liability conditions while ensuring victims retain the right to full compensation, preventing over-compensation claims.

    Extending Compliance Deadlines: Large companies will have one additional year until July 26, 2028.

    Revisions to Carbon Border Adjustment Mechanism (CBAM) aim to reduce administrative burdens while maintaining its effectiveness. Key changes include:

    Exempting Small Importers: Importers handling less than 50 tonnes of CBAM goods annually—mostly SMEs—will be exempt, removing obligations for 90% of importers while still covering over 99% of emissions.

    Simplifying Compliance for Larger Companies: Streamlined authorization, emissions calculation, and reporting rules will ease CBAM obligations for those still in scope.

    These reforms aim to balance regulatory efficiency with sustainability and fairness in global trade.

    Next Steps

    The legislative proposals will now be reviewed by the European Parliament and the Council for approval and adoption. The changes to the CSRD, CSDDD, and CBAM will take effect once an agreement is reached and they are published in the EU Official Journal.

    The Commission urges lawmakers to prioritize this package, particularly the postponement of certain CSRD disclosure requirements and the CSDDD transposition deadline, as these address key stakeholder concerns.

    Additionally, the draft Delegated Act amending the Taxonomy Regulation will be finalized after public feedback and will come into effect at the end of the scrutiny period by the European Parliament and the Council.

  • EFAMA Regulatory Recap Week 9/2025: New ESG Rating Regulations and Fund Consolidation in Focus

    EFAMA Regulatory Recap Week 9/2025: New ESG Rating Regulations and Fund Consolidation in Focus

    The European Fund and Asset Management Association (EFAMA) has announced significant regulatory developments this week, with far-reaching implications for the European asset management industry. Two key topics were at the forefront:


    1. New ESG Rating Regulations – Enhanced Transparency and Oversight
    The European Parliament has passed new ESG rating regulations, introducing stricter oversight of ESG rating providers. These measures aim to enhance transparency in sustainability assessments and combat greenwashing. EFAMA welcomes this move but advocates for even broader regulation of all ESG data products.


    ➡ Key Takeaways:


    ESG rating providers will now need authorisation from ESMA (European Securities and Markets Authority).
    The new regulations strengthen trust in ESG investments and improve the comparability of sustainability assessments.
    EFAMA calls for further regulation to ensure the long-term integrity of the ESG sector.


    2. Fund Consolidation Alone Is Not Enough – EFAMA Proposes Alternative Strategy
    In its latest Market Insights publication, EFAMA questions whether mere fund consolidation in Europe effectively reduces costs. Instead, the association suggests that asset managers should focus on larger fund volumes to better leverage economies of scale.


    ➡ Key Findings:


    A comparison with the US reveals that larger fund volumes, rather than consolidation, achieve more effective cost reductions.
    Economies of scale could help European asset managers remain competitive and alleviate margin pressures.
    The debate over more efficient fund structuring is likely to gain further traction in the coming months.


    LPA Insight: Navigating Regulatory Challenges with the Right Technologies


    These latest developments highlight the increasing importance of RegTech solutions and innovative digital compliance tools for asset managers. As a leading provider of technology solutions for asset and wealth management, LPA Lucht Probst Associates supports financial institutions in efficiently meeting regulatory requirements:


    🔹 Automated ESG Reporting Solutions – Seamless integration into existing processes to comply with new ESG regulations.
    🔹 Digital Fund Structure Analysis – Optimisation of fund strategies through data-driven models.
    🔹 Regulatory Compliance Platforms – Efficient management of policies to ensure adherence to European regulations.


    ➡ Want to learn more? Contact us for bespoke solutions in RegTech & Asset Management.


    These developments underscore the increasing regulatory challenges facing asset managers in Europe. Companies that proactively adopt digital solutions can not only minimise compliance risks but also significantly enhance their operational efficiency and competitiveness.

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  • EBA Endorses European Commission’s Amendments on Conflicts of Interest for Asset-Referenced Tokens

    EBA Endorses European Commission’s Amendments on Conflicts of Interest for Asset-Referenced Tokens

    The European Banking Authority (EBA) has endorsed the European Commission’s substantive amendments to the final draft of the Regulatory Technical Standards (RTS) on conflicts of interest for issuers of asset-referenced tokens. The EBA accepts the Commission’s changes, assuming that risk alignment mechanisms will be included in the final version. A key amendment narrows the definition of “personal transactions” to enhance proportionality, excluding shareholders or members from the scope. The European Commission further restricted this scope by removing additional connected persons, aligning the focus on management bodies and employees. Another major change refines the application of RTS provisions to specific connected persons and clarifies relevant contractual arrangements. The Commission also removed references to risk alignment mechanisms for variable remuneration, but agreed to reinstate them following discussions with the EBA. Additionally, the detailed reporting obligations for conflict of interest management were replaced with a high-level requirement. The EBA acknowledges these modifications as substantive but finds them acceptable for proportionality reasons. Non-substantive changes include structural and wording adjustments to improve clarity and legal coherence.

  • ESMA Publishes Results of Legal Entity Identifier Survey

    ESMA Publishes Results of Legal Entity Identifier Survey

    The European Securities and Markets Authority (ESMA) has published the results of its October 2024 survey on legal entity identifiers. The survey gathered feedback from 136 respondents across 26 countries on the use of different identifiers in financial reporting. Of these respondents, 76% structured their systems around specific legal entity identifiers, among which 83% prioritizing the Legal Entity Identifier (LEI). Costs for adapting systems towards the ability to receive those identifiers varied widely, ranging from €3,000 to €4.5 million, with a median cost of €40,000. Many respondents highlighted significant costs and operational complexities in implementing alternative identifiers. The majority (86% of non-association respondents and 89% of associations) favored the LEI for reporting legal entities. Two regional associations, however, explicitly supported the EUID as an alternative.

  • EBA and ESMA Publish Joint Factsheets on DeFi, Crypto Lending, Borrowing, and Staking Risks

    EBA and ESMA Publish Joint Factsheets on DeFi, Crypto Lending, Borrowing, and Staking Risks


    The 2025 joint EBA-ESMA report     highlights recent developments in crypto lending, borrowing, and staking, pivotal elements of decentralized finance (DeFi). Crypto lending involves transferring crypto-assets or funds to a borrower, secured by collateral, with repayment plus interest agreed for a future date. Conversely, crypto borrowing allows users to access funds while committing to similar repayment terms.

    Crypto staking, integral to Proof-of-Stake blockchains, immobilizes assets to support consensus mechanisms, offering participants validator privileges and block rewards. However, these activities present significant risks, such as collateral chains that can trigger cascading liquidations, systemic liquidity crunches, and deleveraging spirals. Liquidity risks, market volatility, and the absence of creditworthiness checks amplify financial vulnerabilities. Additionally, the concentration of market activity among a few protocols, with 13 entities dominating 86% of the market, raises systemic concerns. Custody risks, operational challenges, and legal uncertainties further complicate these markets.

    Currently, crypto lending operates in 16 EU member states, while staking is available in 23, with services provided by both centralized entities and DeFi protocols. EU markets for DeFi lending and borrowing are valued at €1.8 billion, and staking at €3.6 billion. The European Commission is set to integrate the report’s findings into its MiCAR analysis, with EBA and ESMA continuing their oversight of these emerging sectors. Decentralized Finance (DeFi) refers to financial applications built on blockchain networks that replicate traditional financial functions without intermediaries or centralized institutions.

    Access to DeFi is available via decentralized application interfaces, self-custodial wallets, and centralized trading platforms. In the EU, DeFi remains a niche market, accounting for only 4% of the total crypto-asset market capitalization. Approximately 7.2 million EU users interact with DeFi, but fewer than 15% participate regularly.

    The primary DeFi activities include staking, lending, borrowing, and exchanging crypto-assets. Stablecoins denominated in euros are a minimal presence in DeFi markets. Traditional EU financial institutions have limited exposure to DeFi, with low adoption rates of crypto technologies among banks and negligible investment in blockchain-focused funds.

    DeFi faces risks from on-chain vulnerabilities, such as smart contract exploits and scams, and off-chain threats like phishing and private key compromises. The anonymity of self-custodial wallets poses regulatory challenges and potential misuse for illicit activities. The European Commission and EU authorities continue to monitor DeFi developments, focusing on opportunities and risks outlined in the EBA-ESMA 2025 report.

    LPA – Driving innovation and compliance: With pioneering solutions for crypto ETFs and ETNs, we combine regulatory expertise with cutting-edge technologies in asset and structured products management.

  • Green Economy Meets Regulation: How Our Regulatory Reporting SaaS Solution Empowers Asset Managers to Tackle ESG and SFDR Challenges

    Green Economy Meets Regulation: How Our Regulatory Reporting SaaS Solution Empowers Asset Managers to Tackle ESG and SFDR Challenges

    In recent years, the Green Economy has experienced remarkable growth, driven by increasing investments in renewable energy, sustainable infrastructure, and climate-friendly technologies. With global investment volumes projected to reach USD 4 trillion by 2030*, this trend presents vast opportunities—particularly for asset managers and fund providers. However, these opportunities come with heightened regulatory requirements, compelling businesses to redefine their reporting and compliance processes.

    Currently, regulatory frameworks such as the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and ESG disclosure obligations set forth by ESMA and EBA are of critical importance. Additionally, national regulators like BaFin (Germany) and the FCA (UK) are increasingly enforcing detailed guidelines to ensure compliance with ESG standards. Recent amendments to the SFDR (EU) / SDR (UK), as well as forthcoming updates to ESG standards by ESMA and the FCA, bring new challenges but also clear opportunities for the financial sector.

    Technology as the Key to Regulatory Compliance


    As the Green Economy evolves rapidly, it is clear that technology plays a central role in addressing regulatory demands. Regulatory Reporting SaaS (Software-as-a-Service) solutions, in particular, enable asset managers to navigate the dynamic regulatory landscape efficiently and cost-effectively.
    LPA’s Capmatix AM platform is a solution designed to help asset managers, banks, and insurance companies meet regulatory requirements set forth by ESMA, BaFin, FCA, and other supervisory authorities with precision and efficiency. Our SaaS solution offers a comprehensive suite of features to:

    Ensure compliance and meet regulatory obligations:


    With the latest updates to the ESG-EET standard 1.1.3 and automated integration of all relevant fields, asset managers, insurers, and banks can effortlessly comply with SFDR, MiFID II, Solvency II, and PRIIPs requirements through our Capmatix AM cloud platform.

    Simplify data management:


    The Capmatix AM platform facilitates the collection, classification, and integration of all ESG metrics as outlined in Articles 8 and 9 of the SFDR, while incorporating Principal Adverse Impacts (PAI).

    Optimise reporting and transparency:


    By automating pre-contractual and annual reports (e.g., PRIIPs and Solvency II risk reports) and adhering to jurisdictional requirements—from the EU to the UK—asset managers can create consistent and audit-proof documentation seamlessly. This allows them to focus on successful distribution and portfolio management while reducing maintenance costs and the time spent on regulatory reporting.

    RegTech for Sustainable Transformation


    The latest regulatory developments demonstrate that ESG compliance is not just an obligation but also a competitive advantage. With our Capmatix AM platform, we provide companies with a powerful tool to fully leverage the opportunities of the Green Economy investment strategy and the growing demand for sustainable investments while ensuring regulatory confidence.
    Given the increasing importance of sustainable investments and regulatory demands, we invite you to collaborate with LPA and join the transformation. Let us shape the future of asset management together—sustainably, compliantly, and innovatively.

    *The projection of USD 4 trillion in global investment volume by 2030 is derived from various reports and forecasts by leading institutions and organisations. This figure is often cited in the context of the global transition to clean energy and infrastructure. It is based on estimates reflecting the rising capital needs for technologies such as solar and wind energy, hydrogen, smart grids, sustainable transport, and energy-efficient construction

    Sources:

    International Energy Agency (IEA): The IEA publishes reports like the World Energy Outlook, which estimate investments in renewable energy and clean technologies.
    BloombergNEF (BNEF): A leading provider of sustainable investment data, BNEF regularly reports on the development of the Green Economy and publishes estimates of global investment volumes in clean energy and infrastructure.
    United Nations (UNEP): The UNEP Finance Initiative (UNEP FI) and UN reports on climate finance also highlight global investment needs and forecasts for transitioning to sustainable economic systems.
    IPCC (Intergovernmental Panel on Climate Change): The IPCC issues scientifically grounded reports that often emphasise the need for massive investments in green technologies by 2030.

  • Insights from the World Economic Forum 2025 in Davos: Trends and Innovations for the Asset Management Industry

    Insights from the World Economic Forum 2025 in Davos: Trends and Innovations for the Asset Management Industry

    The global elite in business, technology, and innovation is currently gathering at the World Economic Forum 2025 in Davos. This premier event serves as a key meeting point for those shaping the digital transformation of the finance and asset management industry.

    Our Global Director of Sales, Sebastian Höft, participated in high-profile events such as the World Economic Forum 25’ and the Web3 Investor Meeting. Engaging with leading figures, including Anthony Scaramucci, founder of SkyBridge and former White House Communications Director, he explored expectations and trends for the blockchain industry and digital assets in 2025. The discussions centred on forward-looking topics such as Web3, Artificial Intelligence (AI), and Fintech solutions.

    A special thanks goes to Blockchain Founders Capital and CV Labs for their outstanding organisation. Under the bright Davos sunshine, the inspiring atmosphere at Hotel Seehof provided an excellent backdrop for top-tier networking.

    Highlights and Exclusive Insights

    Sebastian gained valuable insights through direct conversations with top speakers such as Yat Siu (Animoca Brands), Bibin Babu (Paycio), and Olav Chen (Storebrand), focusing on the industry’s requirements and goals for 2025.

    One of the standout moments was the panel discussion between Vivek Anand Oberoi and Wolfgang Männel. “Vivek is not only a compelling entrepreneur but also a fascinating personality – incredibly authentic, balanced, and inspiring. A renowned Bollywood actor, serial entrepreneur with an extraordinary track record, and a visionary perspective on diverse markets and industries. Thank you!” said Sebastian Höft.

    Key Topics and Trends

    • Regulation and Deregulation: While the call for deregulation remains strong, regulation remains a pivotal issue.
    • Web3 and Tokenisation: The global market for digital assets and innovative retail solutions is expanding rapidly, representing multi-billion-dollar potential. Leaders like Larry Fink (BlackRock) continue to drive momentum through their focus on tokenisation.
    • Purpose-Driven Leadership: Why do we admire brands like Apple, Tesla, and Amazon while visionary leaders in Web3 and AI, such as OpenAI or Circle, remain less well-known? The answer: “It’s all about purpose” and “Be popular and visible.”
    • Technological Advances: As noted by Olav Chen, customers now expect near-instantaneous price availability for assets. T+1 has already become a thing of the past.
    • Himanshu Gulati, Norway’s youngest State Secretary, emphasised deregulation as a central focus for 2025.

    At LPA, we are proud to stand at the forefront of innovation and transformation in the finance and asset management industry – together, we are shaping the future of digital finance.

  • PRA Delays UK Implementation of Basel 3.1 to 2027: Capital Requirements Remain a Priority

    PRA Delays UK Implementation of Basel 3.1 to 2027: Capital Requirements Remain a Priority

    The Prudential Regulation Authority (PRA) has announced a one-year delay in the UK implementation of Basel 3.1, moving the date to 1 January 2027. This decision, made in consultation with HM Treasury, reflects ongoing uncertainty about the United States’ timeline for adopting the reforms. Basel 3.1, a response to the 2008 financial crisis, seeks to improve banks’ risk measurement and standardize capital ratios across institutions. Despite the delay, the PRA remains committed to full implementation by 2030 and will adjust transitional periods accordingly.

    Basel 3.1, reflected in the CRR3 framework, introduces significant changes to the calculation of capital requirements for all risk types, aiming to reduce variability and improve consistency across banks. Key reforms include the introduction of a 72.5% capital floor for IRB models, stricter limits on Advanced-IRB usage, and a more detailed standardized approach for credit and operational risk. The framework also recalibrates the leverage ratio, introduces a buffer for global systemically important banks (G-SIBs), and replaces advanced operational risk measurement approaches with a single standardized method to ensure industry-wide consistency. LPA is your prime RegTech supplier, providing innovative solutions for financial institutions and asset managers to meet complex regulatory requirements efficiently.