CBI Strategic Work plan in Securities and Markets Supervision

Colm Kincaid, CBI Director of Securities & Markets Supervision addressed the Association of Compliance Officers in Ireland on the CBI Strategic Workplan in Securities and Markets Supervision. In terms of funds supervision, Mr Kincaid noted that in this strategic cycle the CBI will build on the considerable resource devoted to achieving a significant level of professionalism in the consideration of applications for authorisation, to build an ever more assertive risk-based approach to conduct supervision of funds. In particular Mr Kincaid discussed CBI work on UCITS performance fees, active management as against passive management and measures introduced on foot of CP86.


ESMA UCITS Q&A update will necessitate a review of Key Investor Information Document (KIID) disclosures on benchmarks and performance (whether the UCITS is using a benchmark or not).

ESMA updated its Q&A tool regarding the application of the UCITS Directive. The updated Q&As clarify the following UCITS KIID benchmark and past performance obligations.

Benchmark disclosure

  • UCITS should clearly indicate, in the KIID, whether their strategy is ‘active’ (or ‘actively managed’) or ‘passive’ (or ‘passively managed’). Active UCITS which are not managed in reference to any benchmark should make this clear to investors
  • A UCITS managed in reference to a benchmark is one where the benchmark plays a role in the management of the UCITS, for example, in the explicit or implicit definition of its portfolio composition and/or performance objectives and measures (this clarification led to the repeal of an existing Q&A on past performance)
  • Investors should be provided with an indication of how actively managed the UCITS is, compared to its reference benchmark index

Past performance

  • Where funds name a target in their investment objectives and policies, the performance should be disclosed against the target, even if the comparator is not named a ‘benchmark
  • The performance disclosed in the KIID regarding a benchmark index should be consistent with performance disclosure in other investor communications
  • Prospectus and other fund documents will also require review and likely updating to ensure that all investor communications are consistent. ESMA has provided examples of portfolio composition and performance examples as well as guidance and sample disclosures. The new requirements should be implemented as soon as practicable or at the next KIID update.

ESMA updates its Q&A on AIFMD with two new Q&As on calculation of leverage

ESMA updated its Q&A on the application of the AIFMD. ESMA has added two new Q&As on calculation of leverage under AIFMD. The Q&As provides clarification on the following points:

  • the treatment of short-term interest rate futures for the purposes of AIFMD leverage exposure calculations according to the gross and commitment methods
  • the required frequency of the calculation of leverage by an AIFM managing an EU AIF which employs leverage

ESMA updates its MAR Q&A on inside information in the context of collective investment undertakings (with examples).

ESMA updated its MAR Q&As with non-exhaustive examples where inside information might arise for listed collective investment undertakings.

ESMA first annual report on use of UCITS supervisory sanctions

ESMA published its first annual report on sanctions imposed by NCAs under the UCITS Directive. The report covers the 2016 and 2017 calendar years.