The Front Page, Asset Management & Investment Funds: EU and International Developments


The European Securities and Markets Authority (ESMA) published updated questions and answers on the application of the AIFMD.   The updated Q&A includes new questions and answers (highlighted in yellow in the document) on reporting and calculation of leverage.


ESMA proposes updating Articles 50(1)(g)(iii) and 52 of the UCITS IV Directive to take into account the clearing obligation of certain types of OTC financial derivative transactions required by EMIR. On 22 May 2015, ESMA published an opinion on the impact of EMIR on Articles 50(1)(g) (iii) and 52 and of the UCITS IV Directive for OTC financial derivative transactions that are centrally cleared. Investments in OTC financial derivative transactions are subject to counterparty risk exposure limits in the UCITS IV Directive. Because certain OTC derivatives must now be centrally cleared under EMIR, ESMA has looked at how the limits on these types of financial derivative transactions should be calculated by UCITS, and whether UCITS should apply the same rules to both OTC financial derivative transactions that are centrally cleared and exchange-traded derivatives (ETDs). ESMA concluded that:

  • the UCITS Directive should no longer distinguish between OTC financial derivative transactions and ETDs. Instead, the distinction should be between cleared and non-cleared OTC financial derivative transactions.
  • For OTC financial derivative transactions that are not centrally cleared, there is no need to modify the UCITS Directive and the current counterparty risk limits of Article 52 of the UCITS Directive should continue to apply.
  • Counterparty risk limits should be calibrated to the different types of segregation arrangements taking into account elements such as the portability of the position in the case of a default of the clearing member. In particular, ESMA believes that under individual segregation, UCITS should not apply counterparty risk limits to clearing members whereas under omnibus client segregation UCITS should apply some counterparty risk limits. Moreover, UCITS’ counterparty risk limits to EU CCPs and some non-EU CCPs recognised by ESMA should take into account the relatively low counterparty risk of these entities.

Steven Maijoor, ESMA Chair, said: “The clearing obligation under EMIR has a significant impact on the calculation of counterparty risk of cleared OTC financial derivative transactions by UCITS which cannot be appropriately resolved under the current UCITS Directive. ESMA therefore invites the EU institutions to consider amending the UCITS Directive to make it more compatible with the clearing obligation under EMIR."


The European Commission is conducting a review of Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) in accordance with Article 85(1). The Commission is holding a consultation to obtain feedback from stakeholders on their experiences in the implementation of EMIR to date.The consultation period will close on 13 August 2015. Feedback received as part of the consultation will provide important guidance to the Commission services in preparing their final report.

Money Market Funds

On 29 April 2015, the European Parliament agreed its position on Money Market Fund reform following a plenary vote. Further information on the current state of play in respect of Money Market Funds may be found here.


On 19 May 2015, the Regulation on European Long-Term Investment Funds (ELTIF Regulation) was published in the Official Journal of the EU (OJ). The Regulation comes into force 20 days after publication in the OJ (8 June 2015) and applies from 9 December 2015. . Further information on ELTIFs may be found here.

Capital Markets Union

The EU Commission received 425 responses to its Green Paper on Building a Capital Markets Union, these will be made available from 10 June here. A summary of responses will be published at a later stage along with the Action Plan which is expected in September 2015. Many organisations (including the IFIA and ESMA) published their responses. Please speak with your usual contact in the A&L Goodbody Asset Management & Investment Funds team if you would like copies.

Investment-based crowdfunding

ESMA has published its opinion on investment-based crowdfunding following its December 2014 survey of National Competent Authorities (NCAs) to gather up to date information on regulated investment-based crowdfunding platforms in the EU.

Fourth Anti-Money Laundering Directive and Wire Transfer Regulation

On 20 may 2015, the European Parliament announced that it had adopted the Fourth Anti-Money Laundering Directive and Wire Transfer Regulation. On 22 May 2015, the Council of the EU published the revised texts of:

A brief summary of the Fourth Anti-Money Laundering Directive was set out in the March Front Page.

Risks and Vulnerabilities in the EU Financial System

The Joint Committee of the European Supervisory Authorities (ESAs)   published its fifth Report on Risks and Vulnerabilities in the EU Financial System. Overall, the report found that in the past six months, risks affecting the EU financial system have not changed in substance, but have further intensified.

Draft technical standards under CSDR, UCITS V, MAR, MiFID II Directive, MIFIR and Transparency Directive

ESMA and European Commission have agreed on conducting an early legal review of draft technical standards to enable the Commission to flag to ESMA any concerns from a legal perspective relating to draft technical standards before their final adoption by ESMA reducing the risk of any potential lengthy re-approval process that could be triggered by legal issues. This early review will apply to draft technical standards under the CSDR (the Regulation on improving securities settlement and regulating central securities depositories (CSDs), the UCITS V Directive, the Transparency Directive, the Market Abuse Regulation (MAR), the MiFID II Directive and the Markets in Financial Instruments Regulation (MiFIR). This early legal review process by Commission services will constitute an additional step and, in some cases, will result in a lengthening of the time period before ESMA can finalise and adopt the draft technical standards.

For more information please contact Nollaig Greene or a member of the Asset Management & Investment Funds Team.

Date published: 29 May 2015