The Front Page, Asset Management & Investment Funds: EU & International Developments
ESMA published a speech given by Verena Ross, ESMA Executive Director, on the capital markets union, supervisory convergence and asset management which referenced the following ESMA workstreams on AIFMD:
- Asset segregation: Following ESMA's 2014 consultation on guidelines on asset segregation under the AIFMD, ESMA is considering the merits of the different segregation models. This is in light of the extent to which the AIFMD permits the use of omnibus accounts and the rules on segregation in other legislation, such as the Central Securities Depositories Regulation. ESMA intends to publish a document on this issue by the end of 2016, although it has not yet decided on the most appropriate instrument (possibly guidelines, an opinion to national regulators or a recommendation to the EU institutions on legislative change).
- Leverage: ESMA will develop more detailed guidance on powers to limit leverage under the AIFMD. It will update its AIFMD Q&A on issues concerning reporting of data by AIFMs, including information on leverage. When ESMA has confidence in the information in its database, it will use the data to identify possible trends and risks in the alternative investment fund sector.
- Passporting: As part of its work on the application of the AIFMD passport to non-EU AIFMs and AIFs, ESMA is currently assessing Australia, Japan, Canada, Cayman Islands, Bermuda and the Isle of Man (as requested by the European Commission in December 2015). ESMA is also working to finalise its views on Hong Kong, Singapore and the US. Ms Ross notes that ESMA is relying as far as possible on assessments carried out by the International Monetary Fund for the purposes of its Financial Sector Assessment Program.
Guidelines on sound remuneration policies under the AIFMD- compliance table
ESMA published a compliance table setting out the level of compliance with its guidelines on sound remuneration policies under the AIFMD. This showed:
- All EU countries confirmed they comply or intend to comply, for example Hungary intends to comply by 1 January 2017;
- Malta will implement the Guidelines without incorporating para 18 and the reference to staff of delegates in the definition of Identified Staff as the Malta Financial Services Authority sees no provisions which empower ESMA to include delegated managers in scope and consider Art 20 sufficient to ensure there is no circumvention of the guidelines by the AIFM; and
- Norway is not compliant as the AIFMD has not yet been incorporated in the EEA agreement.
On 12 May 2016, the Presidency of the Council of the EU published a further compromise proposal of the draft Regulation on Money Market Funds (MMF Regulation), which was discussed in our April Front Page.
European Commission level 2 financial services measures
The EU Commission published an overview of its level 2 measures in the area of financial services. The overview comprises a table of level 2 measures (in preparation or adopted) relating to various level 1 legislation including:
- UCITS V Directive.
- MiFID II Directive and the Markets in Financial Instruments Regulation.
- Market Abuse Regulation.
- Payment Services Directive.
- EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories.
- European Venture Capital Funds Regulation.
- European Social Entrepreneurship Funds Regulation.
- Regulation on improving securities settlement and regulating central securities depositories.
- Regulation on key information documents or packaged retail and insurance-based investment products.
- Regulation on European long-term investment funds.
- Regulation on reporting and transparency of securities financing transactions.
The Council of the EU announced that it has adopted the Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (the Benchmark Regulation). As reported in our April Front Page, the European Parliament's adopted the Benchmark Regulation on 28 April 2016. The Benchmark Regulation will enter into force on the day after its publication in the Official Journal of the EU. It will apply 18 months after it enters into force.
- definition of benchmarks;
- measurement of the use of critical and significant benchmarks;
- criteria for the identification of critical benchmarks;
- endorsement of a benchmark / family of benchmarks provided in third countries; and
- transitional provisions
Anti- Money Laundering/Countering the Financing of Terror
FATF Executive Secretary, David Lewis, spoke about evaluating the benefits of National Risk Assessments.
On 17 May 2016, the Council of Europe formally adopted the Network and Information Security (NIS) Directive, a Commission proposal in response to increasing concerns about cyber-attacks and privacy breaches. See here for more detail.
Central Bank of Ireland
Date published: 31st May 2016