ESMA consults on sound remuneration practices for UCITS: ESMA is consulting on sound remuneration procedures under UCITS V. Its main aim is to bring the requirements relating to Undertakings For The Collective Investment Of Transferable Securities (UCITS) into convergence with those already in place under the Alternative Investment Fund Managers Directive (AIFMD). It has also consulted with EBA with a view to requirements being similar for all financial sector firms. The key elements of the proposed guidelines include:

  • that where a UCITS management company is part of a group, non-UCITS sectoral prudential supervisors of group entities may deem certain staff of the UCITS management company which is part of that group to be identified staff for the purpose of their sectoral remuneration rules. ESMA also proposes to review the AIFMD guidelines to reflect this;
  • a common definition of performance fees based on IOSCO standards;
  • guidance on how different rules, such as those set out in the AIFMD and CRD4, should apply where employees or other personnel perform services subject to different sectoral remuneration principles;
  • provisions to prevent management companies circumventing the remuneration rules by delegating activities to external service providers; and
  • how to comply with the rules on the payment of variable remuneration in instruments.

ESMA also seeks views on proportionality including the option to disapply certain of the provisions in exceptional circumstances, in line with the AIFMD approach. The consultation includes a table mapping the relevant UCITS V provisions against AIFMD provisions, and details of current activity in various Member States. ESMA asks for comments by 23 October, and will publish the final guidelines in Q1 2016, before the implementation date for UCITS V, which is 18 March 2016. (Source: ESMA Consults on Sound Remuneration Practices for UCITS)

ESMA publishes AIFMD third-country passport advice: ESMA has published its advice to the Commission on extending the passport under the AIFMD to alternative investment funds and their managers in selected third countries. Its predominant view is that it is too soon after implementation of the AIFMD to give a definitive opinion on how the various national private placement regimes have been working, and whether there should be a third-country passport, and recommends a further report after a longer period. It assessed Guernsey, Hong Kong, Jersey, Singapore, Switzerland and the US. It concluded the passport could be extended now to Jersey and Guernsey, and also to Switzerland as legislative change there will remove any outstanding hurdles. However, it is still working through certain concerns in relation to the other three jurisdictions and wants to assess several more. In view of this, it thinks the Commission may delay extending the passport until it can introduce it for a "batch" of jurisdictions. We will be preparing a more detailed article on the effects of ESMA's opinion. (Source:ESMA Publishes AIFMD Third-Country Passport Advice)