Nordic Securities Association
NSA
The Nordic Securities Association (NSA) represents the common interest of more than 100 banks, investment banks and securities dealers.
ID: 622921012417-15
Lobbying Activity
Meeting with Danuta Maria Hübner (Member of the European Parliament, Rapporteur)
27 Sept 2023 · Markets in Financial Instruments Regulation (MiFIR) Review (Meeting with APA)
Response to Facilitating small and medium sized enterprises’ access to capital
24 Mar 2023
Please see attached for the Nordic Securities Association's (NSA) response to the EU Commission's Listing Act proposal.
Read full responseResponse to Facilitating small and medium sized enterprises’ access to capital
24 Mar 2023
Please see attached for the Nordic Securities Association's (NSA) response to the EU Commission's Listing Act proposal.
Read full responseResponse to EMIR Targeted review
21 Mar 2023
Please find attached feedback from Nordic Securities Association (NSA) - https://nsa-securities.eu/
Read full responseMeeting with Eero Heinäluoma (Member of the European Parliament, Shadow rapporteur)
24 Mar 2022 · MiFiR
Response to Review of the regulatory framework for investment firms and market operators (MiFID 2.1)
22 Mar 2022
To
European Commission
Please see the attached position paper from NSA.
Kind Regards
Sara Mitelman Lindholm and Helle Søby Thygesen
Read full responseMeeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness) and Finanssiala ry - Finance Finland and
5 Nov 2021 · MiFID/MiFIR
Response to Revision of Non-Financial Reporting Directive
13 Jul 2021
Nordic Securities Association (NSA) welcomes the Commission’s proposal to harmonise and standardise companies’ sustainability reporting.
We are overall supportive of the ambitious proposal. It is now important to stay ambitious in the forthcoming political and standard development process. In particular, this applies to the following areas:
• consistency to requirements to the financial sector, cf. below
• expansion of scope to all large undertakings and all listed undertakings
• mandatory standards for large undertakings
• proportionate simplified standards for SMEs - mandatory for listed SMEs and optional for non-listed SMEs
• standardization
• digitization
• assurance
• time schedule.
The most crucial aspect of CSRD is to secure consistency with other EU requirements for the financial sector - both for investment and financing activities and not only in terms of content, but also in terms of timing and scope. The financial sector cannot make sustainable investment and finance decisions and subsequently report on the indirect effect of its activities without the necessary sustainability data from the non-financial undertakings. Thus, when it is not mandatory for a non-financial undertaking to give sustainability data, the financial sector shall not either be obliged to report on the investing in – and financing to this non-financial undertaking.
We are concerned about the expected significant time gaps based on the current draft regulations to the financial sector and the proposed CSRD. We call for a full alignment on content, scope, application data, reporting frequency, transition periods etc. allowing credit institutions and other financial institutions the necessary time to access, assess and make use of the sustainability data from the non-financial undertakings.
Alignment with existing sustainable finance regulations, taxonomy and SFDR, is necessary so that the sustainability reports can be used in a meaningful way. We expect the CSRD to become the most important data source for the financial companies to fulfill their disclosure obligations stemming from the SFDR. Existing widely used voluntary reporting standards, such as TCFD and SASB, should be integrated into the EU’s sustainability reporting standard.
We are in favor of extending the reporting scope to large and listed companies, and to also include SMEs in the scope, although with more proportionate reporting obligations.
The proportionality principles shall, however, apply across sectors, including to small and medium-sized credit institutions and insurance undertakings. In the current proposal two of the three thresholds (balance sheet total and turnover) in the Accounting Directive for determining whether an undertaking is large, are not relevant for credit institutions and insurance undertakings due to their deposit, lending, and insurance activities. The financial thresholds should therefore be reconsidered for financial sector companies.
We support an ambitious timeline but are concerned about the practical implementation and timing of reporting. It is essential that companies are given sufficient implementation time. This should be done in practice by making the date of application dependent on the date of finalisation of the first sustainability reporting standard.
Since the proposal is for a directive, attention should be given to ensure that the implementation and interpretation of it will be the same in all EU Member States. First, we are in favor of assurance, but it needs to be clear what “limited assurance” requires from companies in practice and made clear that the assurance obligation concerns only the sustainability information in the management report. Second, the reporting time horizons, now written as “medium-term” and “long-term”, should be defined in years. Third, banking and insurance sectors do not use the term “turnover”, so it needs to be translated in an applicable way to these sectors.
Read full responseResponse to Climate change mitigation and adaptation taxonomy
18 Dec 2020
Acquisition and ownership of buildings:
Whereas the EU’s Sustainable Finance Action Plan in 2018 stated as its objective to “reorient capital flows towards sustainable investments in order to achieve sustainable and inclusive growth”, the proposed climate mitigation criteria for existing building stock would in effect mean that in many countries sustainable infrastructure investments or lending would no longer be possible (according to the taxonomy criteria). The Commission proposes that only buildings that have Energy Performance Certificate (EPC) level A could be considered sustainable, but the criteria for granting an EPC level A for buildings varies significantly between the EU Member States. Only about 1% of buildings in Finland have that rating, and there is not a single green bond in Europe that would qualify, if this criterion would become effective. In Denmark, the amount of eligible buildings will be reduced by 40% with the proposed amendment to only include buildings with EPC level A.
We believe that the reduction of eligible green buildings and thereby possible green mortgages would have a negative impact on the green transition – both regarding the incentive to buy more energy efficient buildings, building renovation and for future green covered bonds markets. We are worried that the latter will be affected by the reduced eligible green buildings and thereby eligible green mortgages. Issuance of green covered bonds would not be feasible for all issuers, and hence have a negative impact on financing green buildings.
We strongly appeal to the European Commission that it restores the TEG’s original proposal for buildings’ energy efficiency, which is that the top 15% most energy efficient among local stock would be eligible. This criterion would set the same ambition level for different markets, whereas the single EPC level does not, while allowing for the eligibility criteria to tighten over time as buildings reach higher levels of efficiency.
Building renovation:
Building renovations and improving the energy efficiency of existing buildings is essential for the green transition. As the TEG has stated, renovation rates must be increased in order to set the whole building stock on a net-zero emissions pathway. To successfully increase renovation rates, owners of buildings need to be incentivized to renovate.
When a renovated building meets the cost-optimal level of energy performance (resulting from major renovations) not only the CapEx for the renovation should be taxonomy compliant, but also the entire value of the building should be considered eligible. If this is not the case, building owners may be disincentivized from renovating.
Moreover, buildings and renovations are often financed with a mortgage loan, which is typically provided as a full loan based on the value of the entire property. When only the amount financing the specific renovation is considered eligible, the loan is “separated”. From both the perspective of the borrower and the bank, a “separation” of green and “traditional” financing relating to the same property is not feasible.
DNSH criteria for building:
In the Commission’s delegated act proposal, a building should not be built on arable, crop or forest land (whether covered by trees or not). This kind of vague description could mean that there is no land in the Nordic countries that would be eligible as building site. It needs to be specified what constitutes crop land and what is forest, as the understanding of these concepts can be very different depending on country.
The DNSH criteria on acquisition and ownership of buildings also needs a time frame for determining when enough time has passed since the land use change from crop or forest land to a building site. Without determining such a time frame, we can hardly imagine any buildings that would be taxonomy eligible, as most of the constructed areas have been covered by trees at some point in time.
Read full responseMeeting with Andrea Beltramello (Cabinet of Vice-President Valdis Dombrovskis)
29 Nov 2018 · MiFIR
Response to Institutional investors' and asset managers' duties regarding sustainability
22 Aug 2018
Taxonomy:
The Nordic Securities Association (NSA) supports the European Commission’s objective to integrate sustainability targets into the European financial markets. The aim of creating an EU taxonomy is to help investors to direct their investments towards economic activities which contribute to the achievement of environmental objectives, while also respecting minimum social and governance standards. Succeeding in this requires that the taxonomy is flexible and dynamic. Otherwise there is a risk that issuers cannot issue ESG instruments adequately in line with it, if the rules are too detailed and strict. This would be contrary to the goal of the Commission’s Sustainability Action Plan. In this connection, we underline the importance of a taxonomy that is based on existing market practices such as the Green Bond Principles.
In addition, it is vital that the taxonomy can be adjusted over time to encourage market participants to innovate new solutions. There are 5 billion people in developing economies which are entering the most energy intensive phase of their economic growth, and new solutions are needed for these economies to develop cost efficient and clean energy supply. This process has only just started, and the technology to secure this is not in place currently. The taxonomy must foster an innovation-friendly setting in the environmental area.
Third, the criteria for what counts as sustainable operation should be science-based and as neutral as possible with regards to different industries and sectors. It should not create a static binary division between ‘good’ and ‘bad’ industries, but rather it should create incentives for all operators to improve their positive impact to the sustainable development goals (SDGs). Engagement with portfolio companies is an effective way for the financial sector to influence, and the taxonomy should allow different strategies for asset owners and asset managers to advocate the SDGs.
Disclosures:
A requirement for financial market participants to increase transparency about sustainability risks can have the positive impact of more investments being directed to actions that support the SDGs. Transparency and disclosure, when provided in a proportionate and easily understandable way, can facilitate the possibility to make well-informed investment decisions. Nevertheless, to fully understand the regulation’s requirements on the financial market participants, the NSA deems that some concepts need to be better defined. One example is the notion of “sustainability risks”. That notion is central in articles 3 and 4 and would need some clarification to make it possible to understand the requirements in those articles. Another example is the concept of “sustainable investment target”, which is central for the requirements in article 6.
In terms of sequencing, we recommend first putting in place a common EU taxonomy covering at least some essential elements of all E, S and G, before attempting to suggest and/or implement provisions on disclosures of instrument level information. As the taxonomy will be important for the disclosure requirements, the application of the two need to be synchronized
Low carbon benchmarks and positive carbon impact benchmarks:
The proposal for a regulation amending Regulation (EU) 2016/1011 on low carbon benchmarks and positive carbon impact benchmarks could be of valuable help in the investment process. Nevertheless, it is important to keep in mind that indices and the reweighting of indices could have a large impact on the market and potentially lead to increased volatility. Therefore, it is important that the EU Commission, when elaborating and adopting the delegated acts referred to in the proposal, consults the market and thoroughly evaluates the potential market impact of its proposals.
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
21 Jun 2018
The Nordic Securities Association (NSA) supports the European Commission's (EC) sustainable finance agenda. We regret the short period of time allowed to give feedback to this draft delegated act, despite its substantial impact on companies' investment advisory processes.
Providing clients with more information about investment instruments’ sustainability impacts can have the positive influence of more investments being directed to actions that support SDGs. So far, it has been up to the companies themselves to consider how to offer and sell sustainable instruments. Adjusting to new regulation and potentially building capabilities in this area requires sufficient lead time, and the NSA is pleased that the EC’s proposal includes 18 months transitional period. It is important to give companies time to modify their investment service processes. Legislators need to ensure also that any future guidelines and Q&As are prepared well ahead of the entry into force of the legislation. However, we see a need for the proposal to be further clarified before it’s ready for implementation and usable from both an operational and a client perspective.
In terms of sequencing we recommend first putting in place a common EU taxonomy covering at least some essential elements of all E, S and G, before attempting to suggest and/or implement provisions on sustainability in the MiFID suitability assessment process. This would support disclosure of instrument level information in a relevant and uniform way. We would also like to question whether it is appropriate to implement some of the suitability rules through ESMA guidelines already before the adoption of the delegated act - and in two steps (Q 2 and Q 4 2018). In our view this will only increase the complexity for firms and create unnecessary legal uncertainty.
Secondly, in its final report from 31st January 2018, the HLEG recommended to "require investment advisers to ask about, and then respond to, retail investors’ preferences about the sustainable impact of their investments, as a routine component of financial advice". This legislative proposal doesn’t reflect the HLEG recommendation to (only) apply the regulation to retail clients, which means the provisions potentially also apply to professional clients and eligible counterparties. In our experience, eligible counterparties and professional clients are generally sufficiently sophisticated to take relevant considerations – including ESG – into their investment decisions. We therefore propose the HLEG recommendation is followed and the requirement is limited to apply only to retail customers. In addition, the principle of proportionality must apply so that e.g. the obligation to collect information does not create unnecessary administrative burdens and information overload for investment firms and their clients.
Finally, we ask for clarification of which financial instruments are to be covered by the proposed sustainability assessment. MiFID II covers a wide range of financial instruments and services in accordance with Annex I to Directive 2014/65/EU. In our opinion, the intended instrument targets for sustainable investments will be "traditional" investment instruments – e.g. equities, bonds, funds, etc. The definition of financial instruments under MIFID II is broader than these types of investment instruments described above and in many cases, we do not think it is meaningful nor appropriate to extend the requirement for all financial instruments as defined by MiFID II. In particular, this applies to instruments often used to hedge risks arising from companies’ normal commercial activities, such as interest rate and currency derivatives. In our opinion, it is not relevant to consider sustainability preferences when advising customers on these financial instruments - and it may even be impossible in the sense that it is difficult to see how a currency transaction or an interest rate swap should be ESG classified.
Read full responseMeeting with Jan Ceyssens (Cabinet of Vice-President Valdis Dombrovskis)
27 Nov 2017 · European Capital Markets; ESAs review
17 Jul 2017
On 20 June 2017, the Commission published a proposal with a 4 week consultation period to amend Delegated Regulation (EU) 2017/565 with the purpose to clarify the precise scope of the definition of "systematic internaliser" to ensure uniform application of this term and avoid circumvention. The Commission’s focus is to restrain the increasing OTC trade in equities within the so-called Brokers Crossing Networks (BCN), which in their essence are OTC dark pools.
However, the proposal is not targeted towards this concrete challenge; it is much wider in scope, which may lead to unintended consequences i.e. less efficient markets for all instruments.
In order to accommodate a more targeted approach, the Nordic Securities Association (NSA) has provided a concrete proposal for amendment, which can be found on page 3 in the attached document.
Read full responseMeeting with Tatyana Panova (Cabinet of Vice-President Valdis Dombrovskis)
29 May 2017 · EU financial regulation; CMU; MiFIDII/MiFIR
Meeting with Paulina Dejmek Hack (Cabinet of President Jean-Claude Juncker)
15 Mar 2016 · Nordic perspectives on the Capital Markets Union
Meeting with Paulina Dejmek Hack (Cabinet of President Jean-Claude Juncker)
2 Jun 2015 · Capital Markets Union
Meeting with Mette Toftdal Grolleman (Cabinet of Commissioner Jonathan Hill)
2 Jun 2015 · Capital Markets Union
Meeting with Lee Foulger (Cabinet of Vice-President Valdis Dombrovskis)
4 Feb 2015 · CMU/MIFID II
Meeting with Mette Toftdal Grolleman (Cabinet of Commissioner Jonathan Hill)
3 Feb 2015 · CMU, Mifid level 2
Meeting with Mette Toftdal Grolleman (Cabinet of Commissioner Jonathan Hill)
12 Dec 2014 · Capital Markets Union, MiFID II