EU Fund regulation
The EU fund product landscape is deep, diverse and dynamic. Since the birth of the UCITS framework in 1985, European institutions have progressively refined it into a global “gold standard”, one that successfully balances strict regulatory requirements with the flexibility required by manager to meet evolving client demands. The successful evolution of UCITS was followed by the creation of alternative investment funds (AIFs) under the 2011 AIFM Directive, adding a second important pillar to EU fund/manager regulation. Building on this second pillar are further ambitious EU fund products, such as EUSEFs, EUVECAs and ELTIFs. EFAMA has helped guide all of these key regulatory developments, informing policymakers and regulators on their main merits and drawbacks, while also keeping a close eye on their respective review initiatives.
EFAMA strongly supports a fundamental review to the ELTIF regime, in view of broadening its eligible investment universe and adapting it to better meet retail investor needs. We are also closely monitoring the review of the AIFM Directive from a product regulation standpoint, including possible spillover effects on the UCITS Directive requirements. Further work involves keeping pace with relevant ESMA initiatives, such as the work around the Common Supervisory Action on costs and fees for UCITS.
EFAMA welcomes the opportunity to provide its comments on the Good Practices to be adopted by IOSCO for the Termination of Investment Funds. We agree that the decision to terminate a fund can have significant impact on investors in terms of the costs associated with such an action, or the ability for investors to redeem their holdings during the termination process. In this regard, even in the context of a fund’s voluntary termination, asset managers must abide by their fiduciary obligation to act in the best interest of their investors.
EFAMA response to the European Commission’s consultation on the barriers to cross-border distribution of funds
EFAMA welcomes the consultation that the European Commission launched on the cross-border distribution of different types of investment funds (AIFs, UCITS, EuVECA/EuSEF, and ELTIF) and the opportunity to respond as to the remaining barriers to marketing funds across the EU single market, as well as the ways to eliminate them. We, also, fully share the goal of the European Commission in seeking further ways to deepen the Single Market for investment funds.
ESMA’S consultation paper on the review of the methodology included in the guidelines on stress test scenarios under the MMF regulation (MMFR)
In our response to ESMA on its review of the guidelines on stress-testing parameters for Money Market Funds (MMFs), EFAMA cautions against using overly simplistic assumptions.
High-level response to ESMA consultation on notifications for cross-border marketing and management of AIFs and UCITS
EFAMA welcomes the European Securities and Market Authority’s continuous commitment to creating a single market for investment funds, confirmed by the draft regulatory standards currently under consideration. These RTS/ITS would further harmonise information that asset managers should provide to their national competent authorities before marketing or managing an investment fund on a cross-border basis, thus facilitating intra-EU product distribution.
The European Fund and Asset Management Association (EFAMA) has published its response to the European Commission’s targeted consultation on the functioning of the EU Money Market Fund Regulation (MMFR).
The report aims to provide a unique and comprehensive set of facts and figures on the state of the industry at the end of 2018 but also to highlight the fundamental role of asset managers in the financial system and wider economy.
European MMFs in the Covid-19 market turmoil: Evidence, experience and tentative considerations around eventual future reforms
The pandemic-induced market events experienced in March 2020 have marked the first true ‘stress-test’ for European MMFs, following the introduction of the EU Money Market Fund Regulation (MMFR) in 2017. Despite the severity of the liquidity stress in the secondary market for short-term instruments and the significant outflows experienced by European MMFs across all three of the MMFR-identified categories (public debt CNAV, LVNAV and VNAV), funds proved resilient.
Through its ETF Task Force, EFAMA has produced an Investor Education Guide intended to draw out, in a simple form, the defining features for the three main types of ETPs (Exchange-traded products) listed across European markets. The association hopes this guide will primarily assist investors in having a clearer understanding of different ETPs and help investors appreciate the differences between them, especially from a risk and product complexity viewpoint.