April 2014 - European fund industry news

The month in the European fund industry

European Parliament endorses a host of regulatory measures

In a busy session on 15 April, the European Parliament adopted a number of long-awaited regulatory measures, including three that are key for the fund industry.

• UCITS V: The latest amendment to the UCITS framework focuses on depositary functions, remuneration of UCITS managers and sanctions.
• PRIIPs: The Packaged Retail and Insurance-based Investment Products regulation includes the introduction of a standardised document for retail investors, the KID or Key Information Document.
• MiFID II: the Markets in Financial Instruments Directive will have a significant effect of fund distribution in Europe via its investor protection measures and its provisions on commissions, independent advice and review of the complex instruments definition.

After formal adoption of these new rules by the Council and publication in the Official Journal of the European Union, the "Level 2" processes for technical standards will begin.

Also in April, the European Parliament approved a report of the Economic Committee on establishing European Long Term Investment Funds ( ELTIFs).

Commenting on this in a press release, Peter De Proft of EFAMA said that it “represents a vital first step… we hope that discussions in the Council and the upcoming trilogues will ensure a more balanced and better-designed structure of ELTIFs, with the aim of matching investors’ needs and facilitating long term investment in the EU.”
 

Supervisors consult on EMIR technical standards

On 14 April, the three European supervisory authorities (ESMA, the EBA and EIOPA) launched a consultation on draft regulatory technical standards outlining the framework of the European Market Infrastructure Regulation (EMIR).

The standards cover the risk management procedures for counterparties in non-centrally cleared OTC derivatives, the criteria concerning intragroup exemptions and the definitions of practical and legal impediments.

The consultation is open for comments from all interested parties until 14 July 2014.

Also on the subject of EMIR, on 17 April, ALFI updated its FAQ on EMIR and OTC derivatives.
 

Q&A on FATCA

On 15 April, ALFI, the Luxembourg fund association, published a very comprehensive Q&A document for investment funds on FATCA (Foreign Account Tax Compliance Act).

The agreement between the USA and Luxembourg on FATCA was signed in March and this Q&A is intended to serve as a guide for all fund actors.

It will be updated based on future questions from ALFI members.
 

Swiss consult on fund rules overhaul

On 4 April, FINMA, the Swiss supervisor launched a consultation on a total revision of its Collective Investment Schemes Ordinance.

The revision includes substantial changes that enhance investor protection and maintain EU market access in light of the standards that have been changed at the national and international level.

The consultation ends on 19 May 2014.
 

Recent fund industry publications

Publications of interest to the fund industry during April included:

• EFAMA released worldwide fund industry statistics for the fourth quarter of 2013.
• The Association of Global Custodians published five “Key Issues Papers”on depositary bank responsibilities under AIFMD.
• AIMA, the Alternative Investment Management Association, published practical AIFMD implementation guides covering the most important EU jurisdictions for alternative funds: the UK, Ireland and Luxembourg.
• AIMA also published an investor education guide on understanding hedge fund performance, entitled “Apples and Apples”.
• EY released the results of its global survey on reporting of environmental, social and governance performance.
• Deloitte issued a report for investment funds that highlights selected differences between three types of accounting rules: IFRS, U.S. GAAP, and Luxembourg GAAP.
• Finally, in the context of the debate on whether investment funds are “too big to fail”, the Financial Stability Board and IOSCO released the responses to their consultation on assessment methodologies for identifying non-bank non-insurer global systemically important financial institutions.

_{Published on: 30 April 2014}

Fundsquare News 9 - April 2014