Financial Services Regulation and Compliance - Funds Dec 2021

Domestic

CBI Markets Update

The CBI published the Thirty-Sixth Edition of its UCITS Q&A Document which includes two new Q&As, ID's 1105 and 1106.

  • ID 1105 sets out the CBI's expectations that multi-manager UCITS will comply with ESMA's Q&A of July 2021 on performance fees in multi-manager UCITS. It confirms that existing multi-manager UCITS must bring their performance fee methodologies into compliance by 1 January 2023.
  • ID 1106 addresses the establishment of new multi-manager UCITS utilising performance fees and notes that those UCITS must be established in compliance with ESMA's Q&A of July 2021 on performance fees in multi-manager UCITS.

The CBI published the Forty-Fourth Edition of its AIFMD Q&A Document which includes three new Q&As, ID 1151, 1152 and 1153.

  • ID 1151 sets out the CBI's expectations in respect of an arrangement involving a non-discretionary investment advisor which provides services to a QIAIF. The Q&A affirms the CBI's expectation that the investment advisor is performing a role that is advisory in nature and the AIFM must be able to evidence this upon request from the CBI. This clarification will be particularly useful to those firms considering launching investment limited partnership vehicles and follows several exchanges with the CBI.
  • ID 1152 sets out the CBI's expectations that multi-manager retail investor AIFs (“RIAIFs") will comply with ESMA's Q&A of July 2021 on performance fees in multi-manager AIFs. It confirms that existing multi-manager RIAIFs must bring their performance fee methodologies into compliance by 1 January 2023.
  • ID 1153 addresses the establishment of new multi-manager RIAIFs utilising performance fees and notes that those RIAIFs must be established in compliance with ESMAs Q&A of July 2021 on performance fees in multi-manager AIFs.

CBI extends resubmission deadline for beneficial ownership information of CFVs to 21 Dec 2021

The CBI extended the deadline for resubmission of filings to CBI's beneficial ownership register for certain financial vehicles to 21 December 2021. This is relevant for ICAVs, unit trusts, CCFs and ILPs.

European

ESMA letter on the use of reverse solicitation

ESMA responded to a letter from the Commission under the Regulation on the cross-border distribution of funds on reverse solicitation. ESMA were asked for information on the use of reverse solicitation by asset managers and the impact on passporting activities. ESMA conducted a survey among NCAs on the topics.

SFDR EU Taxonomy environmental related disclosures

The effective date of the Level 2 regulatory technical standards for SFDR as amended by the EU Taxonomy Regulation will be delayed by a further six months to 1 January 2023.  For SFDR A8 and A9 UCITS and AIFs and their management companies, the prospectus disclosure templates contained in the RTS are required to be issued as part of the prospectus or supplement by 1 January 2023.  The first reference period for principal adverse impact statements, for those financial market participants that will publish a PAI statement, will be 1 January 2022 to 31 December 2022 and the first publication date will be 30 June 2023.

PRIIPs UCITS exemption to 1 July 2021 formalised

A Directive amending the UCITS Directive extending the exemption for a UCITS to produce a PRIIPs KID to 30 June 2022 was published effective 21 December 2021.  This Directive also provide that from 1 July 2022 a UCITS can produce a PRIIPs KID to satisfy the requirements to produce a UCITS KIID.  This avoids UCITS having to produce both a PRIIPs KID and a UCITS KIID. The Directive will need to be implemented by national measures. These national measures are to apply from 1 July 2022.

A corresponding Regulation amending the PRIIPs Regulation is also effective 21 December providing for the UCITS exemption to be extended to 30 June 2022.

A further Regulation amending the PRIIPs Regulation containing adaptations for UCITS and retail AIFs to comply with the PRIIPs KID will apply from 1 July 2021.

ESA's PRIIPs KID Q&A

An updated version of the ESA's PRIIPs KID Q&A was published by the ESAs on 17 December 2021. There are new Q&As under the headings:

  • general topics
  • market risk assessment - product categories
  • performance scenarios
  • list of costs of PRIIPs other than investment funds
  • presentation of costs

ESMA UCITS Q&As

ESMA updated its UCITS Q&A with new Q&As on:

  • fee rebate arrangement rules
  • issuer concentration rules
  • marketing of new share classes of UCITS for cross-border marketing

ESMA AIFMD Q&A

ESMA updated its AIFMD Q&A with a new Q&A on whether managers of undertakings investing in crypto-assets are subject to the AIFMD.

For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.

Date published: 18 January 2022