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acarda comments on the SFDR regulation (EU) 2019/2088

The implementation of the EU regulation on the disclosure of standardised sustainability indicators for financial investments is progressing rapidly.

The transparency requirements of the Sustainable Finance Disclosure Regulation (SFDR) affect asset managers as well as insurance companies and banks with portfolio management. Accordingly, financial products are to be divided into three ESG classifications in the future:

 

  • financial products with environmental or social characteristics (light green)
  • sustainable financial products with a desired sustainability impact (dark green)
  • other financial products

 

The respective classification of a financial product has to be disclosed in the MiFID II and IDD reporting. Exact specifications for taxonomy and reporting will be available with the final Level 2 drafts by January 2021.

Regardless of whether ESG reporting obligations are effective on March 10, 2021 as planned or will be postponed until January 1, 2022, organizational and technical measures should be initiated immediately. Delayed implementation can have significant negative consequences.

To ensure that your SFDR implementation runs efficiently and smoothly, we have created a roadmap for fund companies and insurance companies:

a) detailed planning of the ESG rating

  • investigation of the current degree of coverage of ESG ratings for the current fund portfolio
  • selection of a EU-conform transition method if the (target) funds use different ESG data suppliers
  • analysis and selection of an ESG service provider for own liquid investments or for funds that do not provide ESG data
  • data provision and selection of a rating method for illiquid products; e.g. real estates, investments in renewable energies, private equity
  • definition of sales processes and data flows
  • coordination of the effects on investment decisions (return vs. risk vs. ESG)

 

b) development of the technical infrastructure as part of a central reporting solution

  • general decision: Build or Buy?
  • building a database for the company, investment and rating data as well as all ESG reports (e.g. in EMT, TPT, QRTs, KID)
  • selection of standards e.g. TPT, EMT, EPT for liquid products, gif-IDA for real estate
  • provision of additional fields and reports for EMTs, TPTs, QRTs, KIDs, brochures and fact sheets
  • integration with ESG rating agencies
  • ESG assessments for illiquid products
  • ESG reconciliations
  • adaptation of the distribution system and the query specifications
  • adaptation of investment and portfolio systems; integration of external advisors/portfolio managers

 

c) Challenges and uncertainties to be considered

  • possible adaptation of the 32 mandatory indicators (ESG taxonomy) also for the providers
  • restrictions in product selection (funds with EU eco-label are rare)
  • not enough companies that report on sustainable activities
  • different requirements for sustainable real estate (new buildings vs. existing buildings)
  • no open access to ESG reports of the companies
  • missing standards forEMTs, TPTs/QRTs, KIDs, real estate data
  • effects on portfolio management
  • consideration or determination of ESG data for non-European portfolios and investments

 

As you can see, the list is quite long and should therefore be worked on quickly. ESG reporting should not be introduced as an isolated solution, but rather in an organizational and technical combination with, for example, Solvency II, MiFID II and PRIIPs reporting. Since the source data and processing logic are similar, a platform solution – e.g. arep from acarda – is highly recommended for all regulatory reports.

Benefit of acarda expertise and our cooperation partners; either as a fully managed ESG service or with the arep solution for generating ESG data. We would be happy to send you detailed documentation and present you the various options.

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ESMA published final guidance on Article 25 of AIFMD to monitor Leverage risk in AIFs. Be prepared with acarda.

The European Securities and Markets Authority (ESMA) published the final guidance on leverage risk in AIF under the Article 25 of the AIFMD (Directive 2011/61/EU) on 17 December 2020.

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New PRIIPs RTS confirmed by EIOPA. What to consider now.

After the revised RTS (Regulatory Technical Standards) for PRIIPs have already been adopted by ESMA and EBA, they have now also been confirmed by EIOPA.

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Over the past few days we have been asked if acarda is affected by the security breaches related to Microsoft Exchange Server security vulnerabilities.

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ESMA published final guidance on Article 25 of AIFMD to monitor Leverage risk in AIFs. Be prepared with acarda.

The European Securities and Markets Authority (ESMA) published the final guidance on leverage risk in AIF under the Article 25 of the AIFMD (Directive 2011/61/EU) on 17 December 2020.

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New PRIIPs RTS confirmed by EIOPA. What to consider now.

After the revised RTS (Regulatory Technical Standards) for PRIIPs have already been adopted by ESMA and EBA, they have now also been confirmed by EIOPA.

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ESA publishes final SFDR RTS: The main changes – Current need for action

On 4 February 2021, the European Supervisory Authorities (ESA) published their final report on the Regulatory Technical Standards (RTS) for SFDR. This results in a number of updates that urgently need to be taken into consideration in the compliance reporting.

To keep you up to date, we have summarised the most important upcoming changes and our recommendations for action.

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SFDR: new MiFID II EMT version 3.1 required by 10/03/2021.

SFDR: new MiFID II EMT version 3.1 required by 10/03/2021.

acarda upgrades its reporting platform with a SFDR module with scoring, classification and the publication functions according to SFDR Level 1 and 2.

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