I’m a software engineer in a financial services company and we’re integrating new technologies. I’ve been told that DORA might affect our work. How does DORA fit with other EU laws that we already comply with, like MiFID II or PSD2?
Understanding the Legal Question
The user is a software engineer working within the financial sector and is in the process of integrating new technologies into their company. They seek to understand the implications of the Digital Operational Resilience Act (DORA) on this integration, particularly how DORA interacts with other existing EU regulations such as MiFID II or PSD2 that the company is already complying with. The inferred goal is to ensure harmonized compliance across multiple regulatory frameworks impacting the financial services industry.
Ambiguities in the Legal Question
Scope of New Technologies: Details are not provided regarding the new technologies being integrated and how they relate to the financial services offered by the user’s company.
Company’s Role: It’s unclear whether the company operates as an investment firm, payment service provider, or another type of entity under MiFID II and PSD2.
Current Regulatory Compliance: The extent and manner in which the company is currently complying with MiFID II and PSD2 are not specified.
Specific Concerns or Scenarios: The user does not indicate if there are specific concerns or scenarios related to DORA that are of interest, for example, in terms of ICT risk management or reporting obligations.
Assumptions for the Legal Analysis and the Plan for the Junior Lawyer
Note: The junior lawyer is what we call a subsystem of Hotseat that completes helper tasks
Scope of New Technologies: Assume the technologies in question are essential for providing financial services and pertain to data processing, cyber security, and potential dependency on third-party ICT service providers.
Company’s Role: Assume the company operates both as an investment firm under MiFID II and a payment service provider under PSD2.
Current Regulatory Compliance: Assume the company is fully compliant with existing regulations mentioned (MiFID II and PSD2) as they pertain to financial transactions, services, and customer interactions.
Specific Concerns or Scenarios: Assume the concerns about DORA primarily revolve around the management of ICT risks and the regulatory overlap in reporting obligations between DORA, MiFID II, and PSD2.
Plan for the Junior Lawyer:
Step-by-Step Instructions:
Introduction to DORA:
Familiarize yourself with the aims and objectives of DORA by reviewing Recitals 1 through 9, focusing on the intentions behind the legislation and its role in the finance sector.
Understand the Scope of DORA:
Examine Articles 1 and 2 to understand DORA’s scope and which entities are subject to its rules, this will help to identify any overlap with MiFID II and PSD2.
Read the definitions provided in Article 3, particularly the ones for “financial entity” and “ICT risk”, to ground the analysis in relevant terms within DORA’s context.
DORA and MiFID II Interactions:
Analyze Article 28 and Recital 63 to identify how DORA provisions apply specifically to investment firms which could be considered within the scope of MiFID II.
Review Article 30, focusing on the key contractual provisions that may relate to or affect obligations under MiFID II.
DORA and PSD2 Intersections:
Investigate Articles 27 and 29 for specific mentions of payment services, as it could suggest interactions with PSD2 requirements, particularly in areas of compliance and third-party service management.
ICT Risk Management:
Scrutinize Article 6 in conjunction with MiFID II and PSD2 provisions regarding risk management, to assess similarities and distinct requirements.
Reporting Obligations Overlap:
Delve into Articles 17 through 19, alongside Recitals 51 and 52, to contrast reporting obligations under DORA with those under MiFID II and PSD2.
Interactions with Other Entities and Authorities:
Study Article 45, as it discusses information-sharing arrangements, to consider potential requirements for coordination with authorities overseeing MiFID II and PSD2 compliance.
Consider Article 46 and respective sectors’ competent authorities which may indicate a point of overlap, particularly regarding supervision and enforcement actions.
Impact Analysis:
Conduct an impact analysis using insights from the above articles to determine DORA’s effects on compliance practices already established under MiFID II and PSD2.
Prepare a Comparative Report:
Create a detailed report drawing parallels between the obligations under DORA and the existing regulatory frameworks of MiFID II and PSD2.
Offer actionable insights on harmonizing compliance efforts and suggest adjustments if necessary to ensure the company meets all regulatory requirements.
Definitions and Terms from the Digital Operational Resilience Act:
Financial Entity: Any entity that operates within the financial sector, including credit institutions, investment firms, and payment service providers, among others, defined by the scope of their activities and services.
ICT Risk: Any identifiable digital or technology-related threat that could potentially impact the operational capabilities of a financial entity, including cybersecurity threats.
MiFID II: The Markets in Financial Instruments Directive, an EU legislation that regulates firms who provide services to clients linked to financial instruments and the venues where those instruments are traded.
PSD2: The Payment Services Directive, EU legislation that regulates payment services and payment service providers.
Question Clarity Rating
Somewhat clear
Clarity Rating Explanation
The original question lacks specific details regarding the types of technologies being integrated, the company’s current operational resilience practices, and precise concerns related to DORA. Assumptions are necessary to provide a detailed answer.