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Improving financial reporting for issuers engaging in carbon allowance programmes
Improving financial reporting for issuers engaging in carbon allowance programmes
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is today releasing a Public Statement on accounting for carbon allowances in the financial statements.
ESMA takes stock of the different accounting approaches in the financial statements of European listed issuers regarding compliance market carbon allowances – specifically emission allowances, rights and permits, such as the EU Emissions Trading System.
The Public Statement highlights IFRS Accounting Standards observed in practice that can be used to account for carbon allowances in their financial reporting. In addition, it provides disclosure recommendations to enhance connectivity and decision usefulness for users by promoting transparency of the information included in the financial statements with respect to carbon allowances (of compliance and voluntary markets), in which an issuer is engaged.
Next steps
ESMA expects issuers and their auditors to consider the messages in this report when preparing and auditing the IFRS financial statements.
▸ Accounting for carbon allowances in financial statements
Further information:
Dan Nacu-Manole
Communications Officer
press@esma.europa.eu08/10/2024 ESMA32-483087481-68Statement - Clearing the smog: Accounting for Carbon Allowances in Financial Statements Joint Committee of the ESAs to focus on digital resilience and sustainability disclosures in 2025
Joint Committee of the ESAs to focus on digital resilience and sustainability disclosures in 2025
The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published today its Work Programme for 2025, placing particular emphasis on ongoing collaboration to tackle cross-sectoral risks, promoting sustainability in the EU financial system and strengthening financial entities’ digital resilience.
More specifically, in addition to fostering regulatory consistency, adequate risk assessment, financial stability as well as the protection of consumers and investors, the ESAs will undertake joint work in 2025 to:
- provide further guidance on sustainability disclosures,
- make progress on financial entities’ digital operational resilience by, among others, launching the oversight of critical information and communication technology (ICT) third-party providers and implementing the major ICT-related incident coordination framework in accordance with the Digital Operational Resilience Act (DORA),
- monitor financial conglomerates,
- promote coordination and cooperation among national innovation facilitators with a view to facilitating the scaling up of innovative solutions in the financial sector, and
- address other cross-sectoral matters such as retail financial services, investment products and securitisation.
Notes
The Joint Committee is a forum with the objective of strengthening cooperation between the three ESAs, where they coordinate their supervisory activities in the scope of their respective responsibilities regularly and closely and ensure consistency in their practices.
In particular, the Joint Committee works in the areas of micro-prudential analyses of cross-sectoral developments, risks and vulnerabilities for financial stability, retail financial services and consumer and investor protection issues and retail investment products, cybersecurity, financial conglomerates, accounting and auditing. More information about the Joint Committee is available here.
Further information:
Aleksandra Bojanić
Senior Communications Officer
press@esma.europa.eu07/10/2024 JC 2024 27Joint Committee Annual Work Programme 2025 ESMA publishes its first annual report on EU Carbon Markets
ESMA publishes its first annual report on EU Carbon Markets
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is today publishing the 2024 EU Carbon Markets report.
This first edition of the report is providing details and insights into the functioning of the EU Emissions Trading System (EU ETS) market.
Key findings
- Prices and volatility: Prices in the EU ETS have declined since the beginning of 2023. This was due to a combination of lower demand for emission allowances from weak industrial activity, falling natural gas prices and decarbonisation of the European energy sector, along with increased supply following the decision to auction additional allowances to finance the REPowerEU plan;
- Auctions: Emission allowance auctions remain significantly concentrated, with 10 participants buying 90% of auctioned volumes, reflecting a preference by most EU ETS operators to source allowances from financial intermediaries; and
- Trading and positions: The vast majority of emission allowance trading in secondary markets takes place through derivatives, reflecting the annual EU ETS compliance cycle where non-financial sector firms hold long positions (for compliance purposes) while banks and investment firms hold short positions.
The report builds on ESMA’s 2022 report on the trading of emission allowances, mandated in the context of rising energy prices and a three-fold increase of emission allowances’ prices in 2021.
The 2024 EU Carbon Markets report was drafted in line with ESMA’s mandate under the EU ETS Directive that is establishing a system for greenhouse gas emission allowance trading in the EU.
Next steps
The ESMA carbon markets report will be produced annually as per ESMA’s mandate.
ESMA will host a webinar to present the main findings of the first edition on Thursday, 24 October, 10:00 – 10:45 CET. Register here by 22 October.
Further information:
Dan Nacu-Manole
Communications Officer
press@esma.europa.eu07/10/2024 ESMA50-43599798-10379Market Report on EU carbon markets - 2024 ESMA launches new consultations under the MiFIR Review
ESMA launches new consultations under the MiFIR Review
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has today launched two consultations on transaction reporting and order book data under the Markets in Financial Instruments Regulation (MiFIR) Review.
ESMA is seeking input on the amendments to the regulatory technical standards (RTS) for the reporting of transactions and to the RTS for the maintenance of data relating to orders in financial instruments.
These RTS are relevant to enhance the information available to stakeholders by improving, simplifying and further harmonising data reporting requirements. The implementation of the revised standards should also result in an overall reduction of the reporting burden for market participants that are subject to different reporting regimes.
The consultations are aimed at Market Participants, Trading Venues, and Investment Firms National Competent Authorities (NCA’s).
Next steps
ESMA will consider the feedback received to both consultations by 3 January 2025.
After reviewing the feedback received, ESMA will publish a final report and submit the draft technical standards to the European Commission (EC) by the end of Q2 2025.
More information to support stakeholders in this transition is available on this webpage centralising the information published in relation to MiFID II/MiFIR review.
Further information:
Cristina Bonillo
Senior Communications Officer
press@esma.europa.euESMA publishes latest edition of its newsletter
ESMA publishes latest edition of its newsletter
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has today published its latest edition of the Spotlight on Markets Newsletter.
Your one-stop-shop in the world of EU financial markets focuses in August and September on our Chair’s contributions at various events on the effectiveness and attractiveness of capital markets in the context of the ESMA Position Paper launched last May. Her speeches emphasise the idea of further stimulating investment in the EU and helping connecting companies and investors to make the vast pool of European savings work for the EU economy. See the Eurofi speech | Eurofi magazine | AFME speech.
We have also published our Work Programme 2025. Next year, ESMA will support the construction of the European Savings and Investment Union and deliver across an ambitious number of mandates such as European Green Bonds, the ESG Rating Providers Regulations, the effective implementation of MiCA, the possible shortening of the settlement cycle, technical standards and guidelines under MiFIR/MiFID II and AIFMD/UCITS and many more.
ESMA also announced the next steps for the selection of Consolidated Tape Providers, published the translations of the Guidelines on funds’ names and released its second risk monitoring report of 2024.
Last, the European Supervisory Authorities warned national supervisors of the financial stability risks stemming from these uncertainties and called for continued vigilance from all financial market participants.
The newsletter features a full overview of all publications, together with information on hearings and webinars. For updates, follow us on X and LinkedIn.
02/10/2024 ESMA NewsletterNewsletter August & September 2024
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