ELTIF: ESMA issues draft Regulatory Technical Standards

On 8 June 2016, the European Securities and Markets Authority (ESMA) issued its Final Report and draft Regulatory Technical Standards (RTS) under the ELTIF Regulation.

ESMA’s key proposals include:

  • The criteria to determine the circumstances in which financial derivatives are used solely for hedging purposes, based on those set out in the 'CESR guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS on risk measurements'
  • That the life of an ELTIF should be determined with reference to the individual asset within the ELTIF portfolio which has the longest investment horizon
  • A non-exhaustive list of the types of market risk ELTIF managers should take into account when assessing the market for potential buyers ahead of the disposal of their asset
  • The criteria for the valuation of the ELTIF assets ahead of their divestment which specify the timing of the valuation and allow for valuations made under the AIFM to be taken into account
  • A grandfathering provision, whereby ELTIFs have one year after the RTS come into force to comply with these rules.

Following discussion with the European Commission, ESMA has postponed the delivery of technical standards on the cost disclosure information that must be included in the ELTIF’s prospectus. This is to take account of the work being undertaken on cost disclosures for PRIIPs.

Updates to ESMA Q&A


On 6 June 2016, ESMA published its updated Q&A with regard to the implementation of the European Markets Infrastructure Regulation (EMIR). The Q&A includes new answers in relation to the clearing obligation, specifically about the self-categorisation that is necessary in order to establish which counterparties belong to which categories.


On 3 June 2016, ESMA published an updated version of its AIFMD Q&A.

The Q&A includes new questions and answers on:

  • The requirements regarding the domicile of EU AIFs that are marketed in the home Member State of the AIFM
  • The marketing of EU feeder AIFs which have a non-EU master AIF
  • Committed capital: and the calculation of the total value of assets under management and additional own funds


On 31 May 2016, ESMA published an updated Q&A on the application of the European Social Entrepreneurship Funds (EuSEF) and the European Venture Capital Funds (EuVECA) Regulations. The Q&A includes a new question and answer on the use of the designations of EuSEF and EuVECA funds when marketed only in their home Member State.

Market Abuse Regulation

The Q&A addresses the question of the scope of the obligation to detect and report market abuse under MAR, and confirms that ESMA considers that the obligation to detect and identify market abuse or attempted market abuse under Article 16(2) of MAR applies broadly, and "persons professionally arranging or executing transactions" thus includes buy side firms, such as investment management firms (AIFs and UCITS managers), as well as firms professionally engaged in trading on own account (proprietary traders).

Click here to view our article on the new market abuse regime.

Benchmark Regulation

On 27 May 2016, ESMA published a Consultation Paper on draft implementing measures regarding the Regulation on Indices used as Benchmarks in Financial Instruments and Financial Contracts, (the Benchmark Regulation). The consultation follows from the earlier discussion paper published in February 2016 and seeks stakeholder feedback on the proposed regulatory framework for benchmarks, including in the following key areas:

  • 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 a third countries
  • Transitional provisions

Comments are invited until 30 June 2016. ESMA will use the feedback received to finalise its technical advice.

The Benchmark Regulation was adopted by the European Council on 17 May 2016. Once published in the Official Journal of the EU it will enter into force on the day after its publication. ESMA has nine months following the entry into force of the regulation to deliver its final draft regulatory and implementing technical standards to the European Commission.

MoU between ESMA and the CFTC on CCPs

A Memorandum of Understanding (MoU) has been signed between ESMA and the US Commodity Futures Trading Commission (CFTC) under the European Market Infrastructure Regulation (EMIR). The MoU provides for the exchange of information regarding Central Counterparties (CCPs), which are established in the US and authorised or recognised by the CFTC and that have applied for EU recognition under EMIR. The MoU is effective as of 02 June 2016.