- ESMA: will NOT intervene in local UCITS performance fee disputes
Following the 2019 ESMA consultation, fund managers are still anticipating the publication of finalised Performance Fee guidelines for UCITS funds. The previous draft edition outlined an immediate application of IOSCO-type rules for new UCITS funds, with 12-month alignment period left available for existing funds.
In the meantime, ESMA have informed FT Ignites they will not arbitrate wherever regulators have chosen to impose in advance localised rules (e.g. Germany), disputed by other EU member states (e.g. Luxembourg).
- Latest on Sustainable Finance
Last week, ESMA published a document outlining their 2-year strategy to “place sustainability at the core of its activities by embedding Environmental, Social, and Governance (ESG) factors in its work”. This includes plans to formally collaborate with IOSCO (to ensure the European ESG framework is aligned with international standards) along with placeholder for imminent publication of their first Report on Trends, Risks and Vulnerabilities (TRV).
In other news, the European Commission (EC) recently initiated an Impact Assessment covering changes to their Non-Financial Reporting Directive 2014/95/EU (NFRD). These are now necessary following recent EU Sustainable Finance developments (e.g. Taxonomy, Green Deal), to address:
- Inadequate publicly available information about how non-financial and sustainability issues impact companies and how companies themselves impact society and the environment.
- Companies incurring unnecessary and avoidable costs related to reporting non-financial information.
The EC invite initial feedback on their proposed roadmap (before 27 February 2020) and will shortly arrange online public consultation and expert meetings (to gather evidence ahead of finalised NFRD proposals to be legally adopted in Q4-2020).
- Consultation: EU-PEPP c/o EIOPA
There is still time to respond to EIOPA’s Pan-European Personal Pension Product (EU-PEPP) consultation, closing 02 March 2020. In the meantime, you can try to secure a ticket for the Public Event to be held in Frankfurt on Monday 23 Feb 2020.
- ESMA: fund Stress Testing “impossible”
With a September 2020 deadline set, several Advisory firms express doubt whether UCITS, AIF managers can feasibly meet criteria set in ESMA’s liquidity fund guidelines (notably “reverse stress testing”) to demonstrate the ability of their fund to withstand sudden, sustained investor outflows.
- MiFIR Product Intervention: applicable to UCITS, AIFMD, PRIIPS?
ESMA have published a final report on Product Intervention requirements in relation to MiFIR – i.e. the regulation part of the so-called MiFID legal “package” along with the revised directive (MiFID II).
This latest ESMA technical advice proposes incorporating the revised MiFIR product intervention rules into the PRIIPS regulation as well making these applicable to Alternative Investment Fund Manager (AIFMs) and UCITS firms in due course. This would grant product intervention powers onto national regulators (e.g. enabling them to ban UCITS, AIF funds for up to 18 months).
ESMA’s report has been submitted to the European Commission, who will present finalised product intervention proposals to the European Parliament & Council (date TBC). Otherwise, the proposed amended MiFIR framework is set to become applicable, 01 Jan 2022.
And for your agenda
Pan-European Personal Pension Product (PEPP)
EIOPA: Public event on the EU PEPP consultation paper
Monday 24 February 2020, 10:30 CET
EU Ecolabeling – Retail Financial Products
European Commission: Ad-hoc Working Group
Wednesday 25 March 2020, 09:30am CET