11.05.2015 VICE PRESIDENT OF ECB CALLS FOR STRESS TESTS ON INVESTMENT FUNDS

The vice president of the European Central Bank (ECB), Vitor Constancio, has highlighted the need for greater scrutiny of investment funds in a speech at the Official Monetary and Financial Institutions Forum in London.

Highlighting the increasingly important role of non-bank entities - including asset managers and investment funds - in providing a second source of funding and diversifying the financial sector, Constancio stressed the need for a monitoring framework for such institutions in order to maintain financial stability in the Eurozone.

In relation to investment funds, Constancio stressed that the sector was generally adequately regulated as a result of the AIFMD and UCITS regimes, but that these regimes were geared towards investor protection as opposed to containing risks and avoiding financial instability. He stated that some of the instruments already available to managers of investment funds should be turned into “macroprudential tools” similar to those in the banking industry. Using the systemic oversight of non-bank institutions in the US as an example, Constancio called for additional liquidity requirements, guided stress tests, minimum and time-varying load, and redemption fees to be part of the toolbox. 

12.05.2015 CHAIR OF ESMA COMMENTS ON UCITS

Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA) has delivered a keynote speech at the Luxembourg Stock Exchange Day on the topic of Capital Markets Union.

Covering a variety of subjects, Maijoor reflected on the success of the Undertakings for Collective Investment in Transferable Securities (UCITS) regime more than 25 years after it was created, and commended it as a successful European product providing strong investor protection while putting forward a number of proposals that could further enhance investor protection. 

In particular, he mentioned the following ideas:

  • using online calculators or central databases to improve clarity in disclosure of costs and expenses; 
  • specifying the types of additional requirements national authorities can impose on UCITS in order to facilitate cross-border marketing; 
  • clarifying the division of competencies in the rules of conduct for UCITS management companies that have established branches in a host Member State to manage UCITS; and 
  • streamlining the regulator-to-regulator notifications procedure, removing the requirement for the UCITS to communicate any updates to documents to the host State regulators. 

12.05.2015 ESMA UPDATES Q&AS ON APPLICATION OF AIFMD

ESMA has published an updated version of its Q&A paper on the application of the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) (2015/ESMA/850).

The paper includes new Q&As on reporting and calculation of leverage. The new Q&As are highlighted in yellow in the paper.

The aim of the Q&As is to promote common supervisory approaches and practices in the application of the AIFMD and its implementing measures by providing responses to questions posed by the general public and competent authorities in relation to the practical application of AIFMD. The answers are also intended to help AIFMs by providing clarity on the content of AIFMD rules.