On 6 April 2017, ESMA announced that it had updated two sets of Q&A: 

  • Q&A on the application of the UCITS Directive
  • Q&A on the application of the UCITS Directive 

They have included one new Q&A, as follows:

  • AIFMD Q&A (section II: notifications of alternative investment funds (AIFs)). The new Q&A relates to the cross-border marketing of EU AIFs by EU AIFMs under Article 32 of the AIFMD. It clarifies that the AIF marketing passport may only be used for marketing to professional investors, as defined in the AIFMD.
  • UCITS Q&A (section IV: notification of UCITS and UCITS management companies; exchange of information between competent authorities). The new Q&A concerns cross-border activities by UCITS management companies. It clarifies that a UCITS management company can notify cross-border activities without having to identify a specific UCITS.

ESMA study notification frameworks and home-host responsibilities under AIFMD and UCITS

ESMA published the findings of its thematic study on notification frameworks and home-host responsibilities under the AIFMD and the UCITS Directive. ESMA carried out the study in 2016 and its findings include the following:

  • The extent to which the passporting frameworks are used varies extensively across Member States, and is mostly consistent with the size of national fund markets and the share the relevant Member State has in the single European fund market. The cross-border marketing of UCITS plays a significantly bigger role than cross-border management.
  • The statistics for the AIFM passporting frameworks mirror the above findings and AIFMs make less use of the AIFMD passports than UCITS management companies.
  • In general, notification frameworks and their administrative procedures are well-established and functioning at national competent authority (NCA) level on a daily basis. The study identified some good practices which could enhance the supervision of cross-border activities pursued by UCITS management companies, UCITS, and AIFMs.

NCAs also identified further issues around the day-to-day functioning of the passporting frameworks that were outside the scope of the study. ESMA will carry out further work to resolve these issues. It will also assess the possibility of contributing to the work on barriers to cross-border distribution of funds carried out by the European Commission.

MMF Regulation

On 5 April 2017, the European Parliament announced that it had adopted the proposed Regulation on Money Market Funds (MMF Regulation). A provisional version of the adopted text was published. The next step is for the MMF Regulation to be formally adopted by the EU Council. It will then be published in the Official Journal of the EU and enter into force 20 days after its publication. The adopted text states that the MMF Regulation shall apply from the date twelve months after the date of entry into force, with the exception of a number of Articles (that is, Articles 11(4), 15(7), 22 and 37(4)), which shall apply from the date of entry into force. See our In Focus paper for a more detailed analysis.

CMU mid-term review

ESMA published its response to the EU Commission consultation on revisions to the capital markets union (CMU) action plan and set out proposals relating to:

  • Supervisory convergence, suggesting that the obligations on NCAs to respond to requests for information made by ESMA be strengthened.
  • Financial data, highlighting the importance of developing an overarching EU financial data strategy, with efficient and effective data collection, management and use of common standards in the reporting requirements specified by different financial authorities.
  • Small and medium sized enterprises (SMEs), noting that it intends to develop proposals for the EU growth prospectus required under the new Prospectus Regulation to ensure that it reflects the need for proportionality for SMEs. ESMA also sets out the steps that it has taken to reflect SMEs' requirements in its work relating to EMIR, CSDR and SFTR.
  • Crowdfunding, suggesting that EU legislators develop a specific crowdfunding EU-level regime that would enable the platforms to operate cross-border based on a common regulatory framework.


On 12 April 2017, Commission Delegated Regulation (EU) 2017/653 (the Delegated Regulation) supplementing the Regulation on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (Regulation 1286/2014) by laying down regulatory technical standards (RTS) regarding the presentation, content, review and revision of KIDs and the conditions for fulfilling the requirement to provide KIDs, was published in the Official Journal of the EU. The Delegated Regulation will apply from 1 January 2018 (Article 14(2) will apply until 31 December 2019). The European Commission adopted this Delegated Regulation on 8 March 2017 after the European Parliament rejected the original version in September 2016. The PRIIPs regime will impact QIAIFs which do not limit investor eligibility to MiFID professional clients and will also impact RIAIFs. It is likely to also impact some UCITS, notwithstanding that Article 14(2) of the Delegated Regulation applies until 31 December 2019. Under Article 14(2), as a derogation from Article 14(1), PRIIP manufacturers may use a UCITS KIID to provide specific information for the purposes of Articles 11 to 13 of the Delegated Regulation, where at least one of the underlying investment options referred to in Article 14(1) is a UCITS or non-UCITS fund referred to in Article 32 of the PRIIPs Regulation.

The European Fund and Asset Management Association (EFAMA) noted that in spite of repeated requests, EU co-legislators and regulators did not take account of some major concerns which will impact on investors' ability to make meaningful comparisons between products.

  • Historic performance will not be shown in the PRIIPs KID. Even if past performance is not necessarily an indication of future performance, it is based on (historical) facts presented in a standardised way, which shows how an investment product was able to meet or exceed its objectives.
  • The methodology for the calculation of transaction costs is based on assumptions with which EFAMA disagree, and which EFAMA believe can mislead investors into believing that a product is more or less expensive than it is in reality.
  • Cost disclosure. Costs are now averaged over a product's recommended holding period and as a result retail investors will no longer be able to compare costs of the same products if these have different holding periods.

Anti-Money Laundering/Combating the Financing of Terror/Corruption

ESAs consultation on draft guidelines under revised Wire Transfer Regulation

On 5 April 2017, the Joint Committee of the ESAs issued a consultation (closing 5 June 2017) on draft guidelines under Article 25 of the revised Wire Transfer Regulation (Regulation (EU) 2015/847). The draft guidelines are set out in section 4 of the consultation paper and explain what payment service providers should do to detect terrorist financing and money laundering and prevent the use of fund transfers for those purposes. The revised Wire Transfer Regulation will apply in Member States from 26 June 2017.

ESA guidelines on risk-based supervision under 4AMLD

The Joint Committee of the European Supervisory Authorities (ESAs) published the official EU language versions of its guidelines on risk-based supervision under Article 48(10) of 4AMLD.

NCAs must notify the ESAs as to whether they comply or intend to comply with the guidelines (or give reasons for non-compliance) by 7 June 2017. NCAs will be considered to be non-compliant if they do not give notification by the deadline,. The guidelines specify the characteristics of a risk-based approach to AML/ CTF supervision. They also set out what NCAs should do to ensure that their allocation of supervisory resources is appropriate for the level of money laundering and terrorist financing risk associated with credit and financial institutions in their sector. Specifically, the guidelines require NCAs to identify and assess the money laundering and terrorist financing risk to which their sector is exposed, and adjust the focus, intensity and frequency of supervisory actions in line with the risk-based approach.