The European Commission adopted today the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which starts on 1 October of this year and runs until the end of 2025.
The Implementing Regulation published today details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods.
In the CBAM’s transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. This will give adequate time for businesses to prepare in a predictable manner, while also allowing for the definitive methodology to be fine-tuned by 2026.
To help both importers and third country producers, the Commission also published today guidance for EU importers and non-EU installations on the practical implementation of the new rules. At the same time, dedicated IT tools to help importers perform and report these calculations are currently being developed, as well as training materials, webinars and tutorials to support businesses when the transitional mechanism begins. While importers will be asked to collect fourth quarter data as of 1 October 2023, their first report will only have to be submitted by 31 January 2024.
Ahead of its adoption by the Commission, the Implementing Regulation was subject to a public consultation and was subsequently approved by the CBAM Committee, composed of representatives from EU Member States. One of the central pillars of the EU’s ambitious Fit for 55 Agenda, CBAM is the EU’s landmark tool to fight carbon leakage. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to take advantage of lower standards, or when EU products are replaced by more carbon-intensive imports, which in turn undermines our climate action.
For more information
Carbon Border Adjustment Mechanism (CBAM)

The post EU Commission | Detailed reporting rules adapted for the Carbon Border Adjustment Mechanism’s transitional phase first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

A new law to ensure that batteries are collected, reused and recycled in Europe is entering into force today. The new Batteries Regulation will ensure that, in the future, batteries have a low carbon footprint, use minimal harmful substances, need less raw materials from non-EU countries, and are collected, reused and recycled to a high degree in Europe. This will support the shift to a circular economy, increase security of supply for raw materials and energy, and enhance the EU’s strategic autonomy.
In line with the circularity ambitions of the European Green Deal, the Batteries Regulation is the first piece of European legislation taking a full life-cycle approach in which sourcing, manufacturing, use and recycling are addressed and enshrined in a single law.
Batteries are a key technology to drive the green transition, support sustainable mobility and contribute to climate neutrality by 2050. To that end, starting from 2025, the Regulation will gradually introduce declaration requirements, performance classes and maximum limits on the carbon footprint of electric vehicles, light means of transport (such as e-bikes and scooters) and rechargeable industrial batteries.
The Batteries Regulation will ensure that batteries placed on the EU single market will only be allowed to contain a restricted amount of harmful substances that are necessary. Substances of concerns used in batteries will be regularly reviewed.
Targets for recycling efficiency, material recovery and recycled content will be introduced gradually from 2025 onwards. All collected waste batteries will have to be recycled and high levels of recovery will have to be achieved, in particular of critical raw materials such as cobalt, lithium and nickel. This will guarantee that valuable materials are recovered at the end of their useful life and brought back in the economy by adopting stricter targets for recycling efficiency and material recovery over time.
Starting in 2027, consumers will be able to remove and replace the portable batteries in their electronic products at any time of the life cycle. This will extend the life of these products before their final disposal, will encourage re-use and will contribute to the reduction of post-consumer waste.
To help consumers make informed decisions on which batteries to purchase, key data will be provided on a label. A QR code will provide access to a digital passport with detailed information on each battery that will help consumers and especially professionals along the value chain in their efforts to make the circular economy a reality for batteries.
Under the new law’s due diligence obligations, companies must identify, prevent and address social and environmental risks linked to the sourcing, processing and trading of raw materials such as lithium, cobalt, nickel and natural graphite contained in their batteries.  The expected massive increase in demand for batteries in the EU should not contribute to an increase of such environmental and social risks.
Next steps
Work will now focus on the application of the law in the Member States, and the redaction of secondary legislation (implementing and delegated acts) providing more detailed rules.
Background
Since 2006, batteries and waste batteries have been regulated at EU level under the Batteries Directive. The Commission proposed to revise this Directive in December 2020 due to new socioeconomic conditions, technological developments, markets, and battery uses.
Demand for batteries is increasing rapidly. It is set to increase 14-fold globally by 2030 and the EU could account for 17% of that demand. This is mostly driven by the electrification of transport. Such exponential growth in demand for batteries will lead to an equivalent increase in demand for raw materials, hence the need to minimise their environmental impact.
In 2017, the Commission launched the European Battery Alliance to build an innovative, sustainable and globally competitive battery value chain in Europe, and ensure supply of batteries needed for decarbonising the transport and energy sectors.
Compliments of the European Commission.The post EU Circular economy: New law on more sustainable, circular and safe batteries enters into force first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Commission adopted today (Aug 17th) the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which starts on 1 October of this year and runs until the end of 2025.
The Implementing Regulation published today details the transitional reporting obligations for EU importers of CBAM goods, as well as the transitional methodology for calculating embedded emissions released during the production process of CBAM goods.
In the CBAM’s transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. This will give adequate time for businesses to prepare in a predictable manner, while also allowing for the definitive methodology to be fine-tuned by 2026.
To help both importers and third country producers, the Commission also published today guidance for EU importers and non-EU installations on the practical implementation of the new rules. At the same time, dedicated IT tools to help importers perform and report these calculations are currently being developed, as well as training materials, webinars and tutorials to support businesses when the transitional mechanism begins. While importers will be asked to collect fourth quarter data as of 1 October 2023, their first report will only have to be submitted by 31 January 2024.
Ahead of its adoption by the Commission, the Implementing Regulation was subject to a public consultation and was subsequently approved by the CBAM Committee, composed of representatives from EU Member States. One of the central pillars of the EU’s ambitious Fit for 55 Agenda, CBAM is the EU’s landmark tool to fight carbon leakage. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to take advantage of lower standards, or when EU products are replaced by more carbon-intensive imports, which in turn undermines our climate action.
For more information
Carbon Border Adjustment Mechanism (CBAM)
Compliments of the European Commission.

The post Commission adopts detailed reporting rules for the Carbon Border Adjustment Mechanism’s transitional phase first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, and national competent authorities (NCAs) completed an analysis of the cross-border provision of investment services during 2022.

The increase in the cross-border provision of financial services has benefits for consumers and firms, as it fosters competition, expands the offer available to consumers and the market for firms. However, it also requires that NCAs intensify their efforts and focus more on the supervision of cross-border activities and cooperation to tackle the issues arising from these activities.
The data collected and analysed across 29 jurisdictions allows ESMA and NCAs to shed light on various aspects of the market for retail investors that receive investment services by credit institutions and investment firms established in other Member States.
Key findings of the data collection[1] include:

A total of around 380 firms[2] provided services to retail clients on a cross-border basis in 2022. The majority of them (59%) are investment firms, while 41% are credit institutions.
Approximately 7.6 million clients in the EU/EEA received investment services from firms located in other EU/EEA Member States in 2022.
In terms of number of firms, Cyprus is the primary location for firms providing cross-border investment services in the EU/EEA, accounting for 23% of the total firms passporting investment services. Luxembourg and Germany follow with 16% and 13% of all firms, respectively.
Looking at the number of EU/EEA retail clients receiving cross-border investment services, more than 75% are served by firms based in three jurisdictions: Cyprus, Germany, and Sweden. Cyprus-based firms reported activity to around 2.5 million cross-border retail clients, German-based firms to around 2 million retail clients and Sweden-based firms to more than 1 million retail clients. All other firms in the scope of the exercise reported a total of around 1.8 million cross-border retail clients, accounting for about a quarter of the total number of retail clients.
The average number of cross-border retail clients per firm varied from 189 (for the only firm in Italy) to about 140,000 retail clients (for the 8 firms based in Sweden). Overall, the average number of retail clients per firm was about 19,000.
As host Member States, Germany, Spain, France and Italy are the most significant destinations (in terms of number of retail clients) for investment firms providing services cross-border in other Member States.
Approximately 5,700 complaints were recorded by firms relating to the provision of cross-border investment services to retail clients in 2022. The number of complaints received is proportional to the number of clients served by firms providing cross-border investment services.

The data analysis highlighted that clients of cross-border investment services primarily lodged complaints[3] about “terms of contract/fees/charges” and about “issues pertaining to general admin/customer services”. Fewer complaints were reported on the topics of “investment products not appropriate/suitable for the client” and “market event related”.

Next steps
ESMA aims to continue performing the data collection exercise on annual basis and endeavours to publish a Report on the findings at the next iteration of the exercise in 2024.

Distribution of firms across EU/EEA Member States

Shares of firms by home Member State

Number of clients by home Member State

Number of clients by host Member State

Compliments of the European Securities and Markets Authority (ESMA).

Footnotes:
[1] Some country specific figures may have to be interpreted with a note of caution as the firm-level reporting did not always follow the ESMA template.
[2] Firms that provided investment services to less than 50 retail clients in any other Member State where not included in the scope of the data collection exercise. This approach has allowed for clear proportionality in conducting the exercise, with no burden for firms below the materiality threshold.
[3] Firms recorded the most frequent complaint topics among the following eight (8) categories:
– Quality or lack of information provided to the client
– Investment product not appropriate/suitable for the client
– Terms of contract/fees/charges
– General admin/customer services (including custody/safekeeping services)
– Issue in relation to withdrawal of investor’s funds from an account / issue connected to exit from the investment and redemption of funds
– Market event related
– IT issues
– OtherThe post ESMA performs an analysis of the cross-border investment activity of firms first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

In 2013, the Financial Stability Board (FSB) established the Official Sector Steering Group (OSSG) with the view of promoting the effective collaboration of the global official sector towards the end goal of successful transition to robust benchmarks, including the transition away from LIBOR.
After a decade of preparation, the LIBOR transition has entered its final stage. The end of June 2023 marked the final major milestone in the LIBOR transition with the end of the remaining USD LIBOR panel. Only three of the US dollar LIBOR settings will continue in a synthetic form after June 2023 and are intended to cease at end-September 2024. In addition, reform of other interest rate benchmarks and related transition efforts have either been completed or near their planned, final conclusion.1
This monumental undertaking has seen an unprecedented shift in wholesale markets and has required the sustained coordination and dedication of regulators, industry bodies and market participants, and will lead to a more stable financial system. To maintain financial stability, it is important that markets remain anchored in robust benchmarks (for example risk-free or nearly risk-free rates) going forward.
In the post transition landscape, the FSB would like to emphasise the following messages:
1. The FSB continues to encourage firms to consider their choice of reference rates and use benchmarks that are robust, suitable, sustainable and compatible with relevant guidance and regulation.
The FSB encourages market participants to use the most robust reference rates, anchored in deep, credible and liquid markets, in order to avoid the need to repeat this exercise.
The FSB recognises that, in some cases, there may be a role for risk-free rate (RFR) derived term rates and has set out the circumstances where the limited use of RFR-based term rates would be compatible with financial stability.2 However, an over-reliance on term rates outside of these limited circumstances carries risks of undermining the robustness of these rates due to the potential for illiquidity in the underlying markets that enable and sustain term RFRs. As such, the FSB reiterates that their use must be in line with official sector and national working group best practice recommendations in the interest of sustaining robust reference rates and financial stability going forward.
Attempting to recreate rates that are based on LIBOR’s underlying wholesale unsecured markets leads to the same inherent vulnerabilities (e.g., excessive use of expert judgment and limited reliance on anchored transactions) and poses financial stability concerns. Using the more recently created ‘credit sensitive rates’ (CSRs) risks undermining the progress made through the decade-long LIBOR transition. IOSCO recently completed its review of certain CSRs against the 2013 Principles for Financial Benchmarks, related to benchmark design, methodology and transparency. In its 3 July 2023 public statement on alternatives to USD LIBOR, IOSCO highlighted concerns that bank-issued commercial paper and certificates of deposit market data are not sufficiently deep, robust and reliable to underpin a benchmark.3) IOSCO stated that limited reliance on anchored transactions lead to the “inverted pyramid” risk and can pose financial stability concerns. IOSCO also called on the CSRs reviewed to refrain from representing that they are “IOSCO-compliant.” IOSCO recommended that the reviewed administrators (1) consider and clearly disclose how they have considered the “concept of proportionality”; (2) consider licensing restrictions in line with recommendations from National Working Groups and Regulators; (3) consider improving the transparency of their rates.
The FSB welcomes IOSCO’s review of these rates and supports and underscores IOSCO’s message that “market participants should proceed with caution if they are considering using CSRs and take into account the risks identified in the review”.
2. Market participants should continue to incorporate robust contractual fallbacks.
At the outset of the LIBOR transition, it was clear that large numbers of contracts, across asset classes, did not make adequate provisions for the permanent cessation of panel-based LIBOR, or for its loss of representativeness. Whilst some contracts did contain fallback arrangements, many were unsuitable, for example because these fallbacks were linked to LIBOR and/or were often designed to cater for only a temporary outage in LIBOR. Some contracts did not contain any fallback provisions.
The LIBOR transition has underscored the importance of robust, workable fallback provisions. Where standard form contracts are used, relevant trade bodies have shown leadership in improving fallback language and encouraging market participants to adopt robust fallback provisions.
The FSB would like to thank in particular ISDA’s leadership on this work. Working with OSSG members, ISDA incorporated explicit fallback rate mechanisms for both IBORs and RFRs referenced in its IBOR Protocol and new definitional booklet. The OSSG encourages market participants to incorporate similar fallbacks into all contracts referencing RFRs.4
Some FSB jurisdictions have laws and regulations5 obliging market participants to incorporate robust and suitable fallback provisions into their contracts. Notwithstanding this, the FSB encourages all market participants to learn from the LIBOR transition experience and to adopt robust fallback mechanisms in all cases.
The FSB would like to thank the OSSG co-chairs, John C. Williams, President of the Federal Reserve Bank of New York and Nikhil Rathi, Chief Executive of the UK Financial Conduct Authority, as well as all past co-chairs. The FSB would also like to thank all OSSG members for their contributions and dedication to improving financial stability.
The FSB will continue to monitor the reference rate environment, including the ongoing use of Term RFRs and CSRs with the benefit of ongoing insights from IOSCO.
Contact:

Press enquiries | +41 61 280 8486 | press@fsb.org | Ref: 23/2023

Compliments of the Financial Stability Board.
1. For example, in Canada, CDOR will be discontinued after June 28, 2024, however, market participants are expected to transition from CDOR to CORRA well before this date, with new derivatives and securities transactions referencing CORRA after end-June 2023. [←]
2. FSB (2021) Overnight risk-free rates and term rates, June [←]
3. IOSCO (2023) Statement on Alternatives to USD LIBOR (July [←]
4. For contracts referencing Term RFRs, the OSSG encourages incorporation of fallbacks to explicitly referenced, externally produced, and IOSCO compliant alternatives of a similar risk-free nature, including fallbacks to overnight RFRs either in arrears or advance, as the primary fallbacks in any rate waterfall. References to internal cost of funds or issuer or lender discretion should be avoided as primary fallbacks, as should references to fallbacks to be selected by a central bank or other official body unless consent for such reference has been granted by the authority named. [←]
5. For example, Article 28(2) of the EU and UK Benchmarks Regulations require supervised entities to have robust plans in place in the event that a benchmark which they are using materially changes or ceases to be provided. [←]The post FSB | Final Reflections on the LIBOR Transition first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The Council has today approved the regulation to strengthen Europe’s semiconductor ecosystem, better known as the ‘Chips Act’. This is the last step in the decision-making procedure.
The Chips Act aims to create the conditions for the development of a European industrial base in the field of semiconductors, attract investment, promote research and innovation and prepare Europe for any future chip supply crisis. The programme should mobilise €43 billion in public and private investment (€3.3 billion from the EU budget), with the objective of doubling the EU’s global market share in semiconductors, from 10% now to at least 20% by 2030.

With the Chips Act, Europe will be a frontrunner in the world semiconductors race. We can already see it in action: new production plants, new investments, new research projects. And in the long run, this will also contribute to the renaissance of our industry and the reduction of our foreign dependencies.
Héctor Gómez Hernández, Spanish Minister for Industry, Trade and Tourism

Next steps
Following the Council’s approval today of the European Parliament’s position, the legislative act has been adopted.
After being signed by the President of the European Parliament and the President of the Council, the regulation will be published in the Official Journal of the European Union and will enter into force on the third day following its publication.
The Council has also passed an amendment to the regulation establishing the joint undertakings under Horizon Europe, to allow the establishment of the chips joint undertaking, which builds upon and renames the existing key digital technologies joint undertaking. The amendment was approved by the Council today following consultation with the Parliament. Both texts will be published in the Official Journal at the same time.
Background
Chips are small devices composed of semiconductors (materials capable of allowing or blocking the flow of electricity) and able to store large quantities of information or perform mathematical and logical operations. They are essential for a wide range of daily-use products, from credit cards to cars or smartphones. With the development of artificial intelligence, 5G networks and the internet of things, demand and market opportunities for chips and semiconductors are expected to grow substantially.
Currently, Europe is too dependent on chips produced abroad, which became even more evident during the COVID-19 crisis. Industry and other strategic sectors such as health, defence and energy faced supply disruptions and shortages. The Chips Act aims to reduce the EU’s vulnerabilities and dependencies on foreign actors while reinforcing the EU’s industrial base for chips, maximising future business opportunities and creating good-quality jobs. This will improve the EU’s security of supply, resilience, and technological sovereignty in the field of chips.
Compliments of the European Council, the Council of the European Union.The post Chips Act: EU Council gives its final approval first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.