Commission Delegated Regulation (EU) 2021/1253 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms

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Consolidated text: Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms (Text with EEA relevance)

Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms (Text with EEA relevance)

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In force )

02/08/2021

ELI: http://data.europa.eu/eli/reg_del/2021/1253/2021-08-02

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02021R1253 — EN — 02.08.2021 — 000.001

This document is merely a documentation tool and has no legal effect. The Union's institutions do not assume any liability for its contents. The authentic versions of the relevant legal acts, including their preambles, are those published in the Official Journal of the European Union and available on EUR-Lex. Those official texts are directly accessible through the links embedded in this document.

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COMMISSION DELEGATED REGULATION (EU) 2021/1253

of 21 April 2021

amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms

(Text with EEA relevance)

(OJ L 277, 2.8.2021, p. 1)

Corrected by:

►C1

Correction, OJ L 309, 2.9.2021, p. 38 (2021/1253)

▼B

COMMISSION DELEGATED REGULATION (EU) 2021/1253

of 21 April 2021

amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms

(Text with EEA relevance)

Article 1

Amendment of Delegated Regulation (EU) 2017/565

Delegated Regulation (EU) 2017/565 is amended as follows:

The following points 7, 8 and 9 are added to Article 2:

▼C1

‘7.

‘sustainability preferences’ means the decision of a client or potential client as to whether and, if so, to what extent one or more of the following financial instruments are to be included in his or her investment:

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a)

a financial instrument in which the client or potential client determines that a minimum proportion is to be invested in environmentally sustainable investments within the meaning of Article 2(1) of Regulation (EU) 2020/852 of the European Parliament and of the Council ( *1 );

b)

a financial instrument in which the client or potential client determines that a minimum proportion is to be invested in sustainable investments within the meaning of Article 2(17) of Regulation (EU) 2019/2088 of the European Parliament and of the Council ( *2 );

c)

a financial instrument in which the principal adverse impacts on sustainability factors are taken into account, with the qualitative or quantitative elements by which that consideration is demonstrated being determined by the client or potential client;

‘sustainability factors’ means sustainability factors within the meaning of Article 2(24) of Regulation (EU) 2019/2088;

‘sustainability risks’ means sustainability risks within the meaning of Article 2(22) of Regulation (EU) 2019/2088.

Article 21(1) is replaced by the following:

a)

the second subparagraph is replaced by the following:

‘Investment firms shall take sustainability risks into account when fulfilling the requirements set out in this paragraph.’

b)

the following subparagraph is added:

‘When fulfilling the requirements under this paragraph, investment firms shall take into account the nature, scale and complexity of their business, as well as the nature and range of the investment services and investment activities provided in the course of that business.’

Article 23(1)(a) is replaced by the following:

‘(a) establish and implement appropriate strategies and procedures for their risk management that identify the risks associated with the firm’s business, processes and systems and, where appropriate, set risk tolerance thresholds. Investment firms shall take sustainability risks into account;’

Article 33 is replaced by the following:

‘Article 33

Potential conflicts of interest detrimental to a client

(Article 16(3) and Article 23 of Directive 2014/65/EU)

Investment firms shall, in identifying the types of conflicts of interest that may arise in the provision of investment services or ancillary services, or a combination thereof, and that may be detrimental to the interests of a client, including his or her sustainability preferences, at least address the question of whether any of the following situations apply to the investment firm, a relevant person, or a person directly or indirectly linked to the firm by control, by virtue of the fact that it provides investment or ancillary services or carries out investment activities:

(a)

the investment firm or one of the persons mentioned is likely to make a financial gain or avoid a financial loss, at the expense of the client;

(b)

the investment firm or one of the persons mentioned has an interest in the outcome of a service provided to a client or a transaction carried out on behalf of a client which is not in line with the client’s interest in that outcome;

(c)

the investment firm or one of the persons mentioned has a financial or other incentive to place the interests of another client or group of clients ahead of the interests of the client;

(d)

the investment firm or one of the persons mentioned carries on the same business as the client;

(e)

the investment firm or one of the persons mentioned receives or will receive from a person other than the client, in relation to a service provided to the client, an incentive in the form of financial or non-financial benefits or services.’

Article 52(3) is replaced by the following:

‘(3)

Investment firms shall describe the following:

(a)

the types of financial instruments under consideration;

(b)

the range of financial instruments and the providers of those instruments, analysed by the respective type of financial instrument, in accordance with the scope of services;

(c)

where relevant, the sustainability factors taken into account in the selection of financial instruments;

(d)

the manner in which, when providing independent advice, the service provided meets the conditions for the independent provision of investment advice, and the factors taken into account by the investment firm in its selection process for recommending financial instruments, including risks, costs and the complexity of the financial instruments.’

Article 54 is amended as follows:

a)

paragraph 2(a) is replaced by the following:

‘(a) it is consistent with the investment objectives of the relevant client, including his or her risk appetite and any sustainability preferences;’

b)

paragraph 5 is replaced by the following:

‘(5)

Information on the investment objectives of the client or potential client shall include, where relevant, information on the period over which the client intends to hold the investment, his or her risk appetite, risk tolerance, the purpose of the investment and, additionally, his or her sustainability preferences.’

c)

paragraph 9 is replaced by the following:

‘(9)

Investment firms shall apply and be able to demonstrate appropriate strategies and procedures to ensure that they are able to understand the nature and characteristics, including costs and risks, of the investment services and financial instruments selected and assessed by them for their clients, and to assess, taking into account costs and complexity, whether equivalent investment services or financial instruments can meet their clients’ profiles.’

d)

paragraph 10 is replaced by the following:

‘(10)

When providing investment advice or portfolio management services, an investment firm shall not make a recommendation or take a trading decision if none of the services or instruments are suitable for the client.

An investment firm shall not recommend financial instruments as being consistent with a client’s or potential client’s sustainability preferences, or take trading decisions regarding such instruments, if those financial instruments are not consistent with those preferences. The investment firm shall explain to its clients or potential clients the reasons for not doing so and record the justification.

If no financial instrument is consistent with the client’s or potential client’s sustainability preferences and the client decides to adapt his or her sustainability preferences, that client decision, including the justification, shall be recorded by the investment firm.’

e)

the first subparagraph of paragraph 12 is replaced by the following:

‘(12)

When providing investment advice, investment firms shall provide the retail investor with a report providing an overview of the advice given and stating how the recommendation given is suitable for the relevant retail investor, which shall also include information on how it is tailored to the investment objectives and personal circumstances of the client, including the required investment duration, the client’s knowledge and experience, risk appetite, loss bearing capacity and sustainability preferences.’

f)

the following new subparagraph is added to paragraph 13:

‘The requirements regarding the sustainability preferences of clients or potential clients shall not affect the conditions set out in the first subparagraph.’

Article 2

Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

It shall apply from 2 August 2022.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

( *1 )

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

( *2 )

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).’

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