EFAMA welcomes the trilogue agreement on the ESFS review under the Romanian EU Presidency

Brussels, 2 April 2019 - EFAMA commends the determined efforts deployed by the Romanian Presidency, the European Parliament negotiating team and the European Commission to reach a trilogue agreement on the ESFS review under this mandate.

Two positive points worth highlighting in the ESFS agreement:

  • It preserves the existing delegation model by reconfirming that National Competent Authorities remain fully in charge of authorisation of delegation and outsourcing arrangements. Delegation is a reliable, well-functioning and tested model, central to ensuring investor choice and EU investors’ access to world leading investment expertise. It was key to the UCITS success in Europe and globally, and Europe needs more of such successes. We also strongly welcome the formal recognition of “coordination groups”, comprising Member NCAs, as fora to discuss matters of common concern and for NCAs to share their best practices in ways that foster greater supervisory convergence, e.g. through thematic peer reviews, etc.
  • It acknowledges the role of National Competent Authorities (NCAs) to supervise and authorise ELTIFs, EUSEFs, and EUVECAs. NCAs are indeed better suited to deal with the different market structures and legal regimes of Member States.

The final text includes a provision on “no-action letters” as part of the ESAs toolbox, and this is good news. We have argued that forbearance mechanisms are needed in instances where financial institutions would be found in breach of other EU provisions, or where compliance with Level 2 provisions is recognised as difficult, where not impossible. The agreed text however establishes a process that is far from swift or pragmatic, and ultimately it remains unclear whether the ESAs can effectively suspend application of unworkable L2 acts. Another missed opportunity is not having greater representation of financial market supervisors at the level of the ESRB General Board.

Finally, we welcome the fact that ESMA and EIOPA will be given the possibility to provide their expert judgement prior to EBA reaching decisions related to AML- policies targeting financial institutions covered in their mandate. It is also important that such decisions are to be taken in agreement with ESMA/EIOPA. This ensures that the right expertise is in place and the decisions reflect the specific features of each business model and industry sector.​

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