Introduction of the Omnibus package - regulatory updates
Article provided by Deloitte Tax & Consulting, SARL.
Summary
The EU's 2025 three-step Omnibus package targets a 25% reduction in administrative burdens (35% for SMEs) and covers sustainability, investment, and digitalization. Through continuous annual evaluations, combined with ESMA's initiatives, the EU aims to improve its framework for more efficient and streamlined regulatory compliance.
Timeline
Q1 2025 - First Omnibus Package: Focuses on sustainability, particularly the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy Regulation. The package aims to simplify sustainable finance reporting, align requirements with investor needs, introduce proportionate timelines, and ensure obligations that are appropriate to the scale of different companies' activities. It will also help to mitigate excessive reporting requirements on smaller companies along supply chains. Additionally, ESMA is consulting on proposals to digitalize sustainability disclosures following the European Single Electronic Format (ESEF).
Q1 2025 - Second Omnibus Package: Focuses on investment simplification, primarily through the InvestEU programme and the European Fund for Strategic Investments. It aims to enhance investment by simplifying reporting and reducing administrative burdens associated with these programs. Simultaneously, ESMA has introduced changes in the transparency framework under the MiFIR Review, which will help reduce the reporting burden for market participants by discontinuing specific reporting flows and relying on transaction data reported under Article 26 of MiFIR.
Q2 2025 - Third Omnibus Package: Introduces a new definition for small mid-caps with tailored regulations suited to the companies' sizes, eliminates inefficient paper requirements, and advances a digital regulatory environment. The package aims to foster a more agile approach to multiple-purpose reporting and ensure that mid-sized companies benefit from adapted regulatory expectations. ESMA will discontinue voluntary publication of quarterly SI calculations.
Q4 2025: ESMA to publish calculations based on transaction data with revised technical standards on equity transparency. Additionally, ESMA will propose changes to the volume cap standards, aiming for alignment across reporting regimes like EMIR (European Market Infrastructure Regulation).
Impact on Fund Distributors & Assets Managers
Reduction in Administrative Burden: The Omnibus package, alongside ESMA's initiatives, aims to reduce the administrative workload by simplifying reporting requirements and aligning them closer with investor needs. Cost savings and more efficient operations might be the result of this advance.
Sustainability Reporting Alignment: With a focus on sustainability, the first Omnibus package will ease sustainable finance reporting, which is especially beneficial for firms needing to comply with multiple directives. ESMA's move towards digitalizing sustainability disclosures will further reduce the reporting burden.
Investment Facilitation: The second package's focus on investment will simplify processes under the InvestEU programme and the European Fund for Strategic Investments, making it easier for asset managers to engage in and benefit from these initiatives. ESMA's changes in the transparency framework under the MiFIR (Markets in Financial Instruments Regulation) Review will contribute to reducing the reporting burden for market participants.
Digitalization and New Regulations for SMEs: The third package's move towards a digital regulatory environment and the introduction of a new SME definition has the potential to make compliance more manageable for smaller asset managers and fund distributors.
The Omnibus packages, as well as ESMA's initiatives, are set to significantly reduce complexity, streamline compliance processes, and promise to foster a more supportive regulatory environment for the fund industry and beyond.
