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.
EFAMA welcomes the recent statement by Ashley Alder, IOSCO Board Chair, on liquidity risk management for investment funds.
EFAMA recently finalised a Comment Paper in response to the ECBs November 2018 findings around liquidity and counterparty risks in ETFs, included in the ECBs semi-annual Financial Stability Review.
We welcome yesterday's vote by the European Parliament plenary, formally adopting the trilogue agreement on the Commission's initiative to remove cross-border barriers to the distribution of investment funds.
This marks a decisive recognition of the need to postpone the application of the PRIIPs disclosure regime for UCITS by two years, in light of the regime's documented shortcomings. It also allows the European Commission more time to conduct a thorough review of the same within one year.
EFAMA Market Insights | Issue #1 | Net outflows from UCITS in March 2020 - Industry weathers Covid-19 crisis
The Covid-19 pandemic significantly impacted financial markets. Stock markets across the world suffered a steep decline driven by lower economic growth and corporate profits. As anticipated, the crisis caused substantial net outflows from UCITS in March (EUR 313 billion). However, as a percentage of net assets, these outflows were no higher than in October 2008, at the height of the global financial crisis (2.9%).
In 2019, AMIC and EFAMA decided to update their 2016 report “Managing Fund Liquidity Risk in Europe” following important policy and regulatory developments at EU and international levels. The purpose of this updated report is to outline the practical liquidity risk management processes which fund management companies put in place when setting up a fund and implement throughout the life of the fund. Also, the report describes the existing European and international regulatory frameworks in the area of fund liquidity risk management.
The EFAMA Asset Management in Europe report aims at providing facts and figures to gain a better understanding of the role of the European asset management industry. It takes a different approach from that of the other EFAMA research reports, on two grounds. Firstly, this report does not focus exclusively on investment funds, but it also analyses the assets that are managed by asset managers under the form of discretionary mandates. Secondly, the report focuses on the countries where the investment fund assets are managed rather than on the countries in which the funds are domiciled.