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

Corrigendum to UCITS V Directive 

On 27 February 2016, a corrigendum to the text of the UCITS V Directive (2014/91/EU) was published in the Official Journal of the EU (OJ). The corrigendum relates to Article 1(2) of the UCITS V Directive and, in particular, to Article 14b(1)(m) of the UCITS IV Directive (2009/65/EC), which was introduced by Article 1(2) of the UCITS V Directive. The amendment replaces the phrase "management of the UCITS accounts" with "management of UCITS accounts" in the first paragraph of Article 14b(1)(m). The UCITS V Directive was published in the OJ in August 2014.

Capital Markets Union 

On 18 March 2016, the European Commission published a speech by Jonathan Hill, the European Commissioner for Financial Stability, Financial Services and Capital Markets Union, on the Commission's work on the capital markets union (CMU).
Points of interest in the speech include:

  • This year, the Commission will start its work to strenghten venture capital markets by amending existing legislation governing venture capital funds, in order to build up scale, diversity and choice. It will look to see how it can use public money to attract private investment, with a pan-European venture capital fund. The Commission is keen to encourage the development of crowd-funding as a source of financing for start-ups, and it also wants to see whether it can encourage the development of industry-led business growth funds, in order to support equity in small and medium-sized enterprises (SMEs).
  • The Commission has made a proposal to restart Europe's securitisation markets, in order to free up more bank lending to smaller companies. Its proposal sets out criteria for simple, transparent and standardised securitisation, with reduced bank capital requirements for securitisations that qualify. The Council of the EU has reached an agreement on this "in record time", as governments recognise the importance of freeing up the supply of bank lending. The onus is now on the European Parliament to take this forward.
  • To deepen financial markets for companies of all sizes, the Commission is working to remove barriers to cross-border investment. To give investors more choice, it wants to remove the passport system for investment funds, so that they can offer their services more easily and compete in different markets. This year, the Commission will launch a consultation to identify the main barriers to funds operating in countries other than their own.

ESMA market risk indicator

ESMA's latest risk report has found that overall market risks for European securities markets remain high with the market risk indicator remaining at very high – the highest level – with a stable outlook, and liquidity and contagion risk remain at high with a stable outlook.


On 11 March 2016, ESMA published a discussion paper on regulatory technical standards (RTS) and implementing technical standards (ITS) under the Regulation on reporting and transparency of securities financing transactions (SFTR). The paper includes:

  • Section 2 which explains the background to the proposals.
  • Section 3 which includes detailed information on the procedure and criteria for registration as a trade repository under the SFTR.
  • Section 4 which sets out the use of internationally agreed reporting standards, the reporting logic under the SFTR and the main aspects of the structure of the securities financing transaction report.
  • Section 5 which concerns the requirements regarding transparency of data and aggregation and comparison of data.
  • Section 6 which sets out the tables of fields for the relevant types of securities financing transactions, together with a summary of the questions.

Responses are invited by 22 April 2016. ESMA intends to publish a consultation paper in the third quarter of 2016. The final report and draft technical standards will be submitted to the European Commission for endorsement by 13 January 2017. 

Risk mitigation techniques for OTC derivative contracts not cleared by CCP under EMIR

On 8 March 2016, the Joint Committee of the European Supervisory Authorities (ESAs) published a press release and final draft regulatory technical standards (RTS) on risk mitigation techniques for OTC derivative contracts not cleared by a central counterparty (CCP) under Article 11(15) of EMIR (the Regulation on OTC derivatives, CCPs and trade repositories. Article 11(15) of EMIR requires the ESAs to develop RTS specifying the risk-management procedures for non-centrally cleared OTC derivatives, the procedures for counterparties and competent authorities concerning intra-group exemptions for this type of contract and the criteria for the identification of practical or legal impediment to the prompt transfer of funds between counterparties. The final draft RTS:

  • Prescribe that, for OTC derivatives not cleared by a CCP, counterparties must exchange both initial and variation margins.
  • Outline the list of eligible collateral for the exchange of margins, the criteria to ensure the collateral is sufficiently diversified and not subject to wrong-way risk, as well as the methods to determine appropriate collateral haircuts. 
  • Set out the operational procedures related to documentation, legal assessments of the enforceability of the agreements and the timing of the collateral exchange. 
  • Set out the procedures for counterparties and competent authorities related to the treatment of intra-group derivative contracts. 

European Commission overview of level 2 legislative measures for financial services 

On 8 March 2016, the European Commission published a document dated 8 February 2016 providing an overview of the date of adoption or, planned year of adoption, of level 2 financial services measures. The level 1 legislative acts under which the Commission expects to adopt level 2 measures during the course of 2016 include:

  • Markets in Financial Instruments Directive (2004/39/EC) (MiFID).
  • Solvency II Directive (2009/138/EC).
  • UCITS IV Directive (2009/65/EC).
  • Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD).
  • CRD IV Directive (2013/36/EU) and Capital Requirements Regulation (Regulation 575/2013) (CRR).
  • Recast Deposit Guarantee Schemes Directive (2014/49/EU) (recast DGSD). 
  • Bank Recovery and Resolution Directive (2014/59/EU) (BRRD).
  • MiFID II Directive (2014/65/EU) and Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR).
  • Market Abuse Regulation (Regulation 596/2014) (MAR).
  • EMIR (Regulation 638/2012).
  • Central Securities Depositories Regulation (Regulation 909/2014) (CSDR).

On 7 March 2016, the Commission published a document setting out its agenda and timetable for the legislative proposals and non-legislative acts under its 2016 work programme that it expects to adopt.

Central Bank of Ireland

7 new platforms and 47 new funds (including sub-funds) were authorised by the Central Bank in January 2016

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

Date published: 24 March 2016