On November 4, the FCA published a statement on reporting requirements for managers of AIFs (AIFMs) under the AIFMD.
In certain circumstances, firms already authorized as AIFMs will be required to provide regulatory reports to the FCA in the first quarter of 2014, using the XML v1.0 reporting template, which was published by ESMA in October 2013.
Further details on the reporting mechanism are due to be published on the FCA website in due course. Statement.
On November 5, ESMA published a speech given by the Chair of ESMA, Steven Maijoor, at the European Fund and Asset Management Association investment management forum. The speech states that:
- ESMA has finished its work on memoranda of understanding which relate to the AIFMD, although negotiations continue with several non-EU authorities, including those in South Africa, Russia and China.
- ESMA is due to start drafting a report on the extension of the AIFMD passport to non-EU AIFs and AIF managers.
ESMA is examining why retail exposure to exchange traded funds (ETFs) is relatively low. Speech.
On November 6, the Joint Committee of the European Supervisory Authorities (ESAs) issued a consultation paper by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) concerning draft guidance for the handling of complaints in the securities and banking industries. This guidance aims to:
- clarify expectations on firms’ procedures for complaints handling;
- give guidance on the provision of information to complainants and the procedures for answering complaints;
- harmonize the complaint handling arrangements of firms in order to help protect consumers; and
- set a minimum level of supervision for firms’ complaint handling arrangements on an EU-wide basis.
The guidance applies to investment firms, UCITS management companies and UCITS investment companies that have not designated a management company, AIFMs providing MiFID services, credit institutions and e-money institutions.
The deadline for responses to the consultation is February 7, 2014, with the final report scheduled to be published in the first quarter of 2014. Consultation Paper.
On October 28, ESMA published version 20 of its “Prospectuses: Questions and Answers.” Three new questions have been incorporated, addressing the following areas:
- Statement of auditors’ agreement where a prospectus includes a profit estimate (question 88);
- Application of proportionate disclosure regime to a rights issue that is not fully subscribed (question 89); and
- Proportionate disclosure regime for rights issues and admission to trading (question 90).
The existing questions relating to pro forma financial information (question 51) and level of disclosure concerning price information for share offerings (question 58) have been updated.
Note that as the revised responses to these questions include changes to current market practices, they are subject to a 3 month phase-in period and will not take effect until January 28, 2014. Prospectuses: Questions and Answers.
On October 2, ESMA published its second round of advice on the equivalence of regulatory regimes under EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories) to the European Commission.
The advice includes equivalence assessments of the regulatory regimes of India, Canada and South Korea and the existing equivalence assessments of Australia, Switzerland, Hong Kong and Singapore.
Comparisons were made between the third-country rules and EMIR requirements for trade repositories and/or central clearing, CCPs, reporting, non-financial counterparties and risk mitigation techniques for uncleared trades.
On August 15, the Financial Conduct Authority (FCA) updated the “latest news” webpage on the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) with information on passporting arrangements under the AIFMD.
The update notes that ESMA recently published an opinion that recognizes the right of firms to be able to exercise passport rights in Member States that have not yet transposed the directive, assuming the firms’ own home Member State has transposed the AIFMD.
As the UK has transposed the AIFMD, UK firms should be able to exercise passporting rights in all EEA states, with the exception of Norway, Liechtenstein and Iceland. UK firms will be able to exercise AIFMD passporting rights in these jurisdictions when the EEA Agreement (to which Norway, Liechtenstein and Iceland are signatories) has been updated to include the AIFMD within its scope. Similarly, UK firms will be able to exercise passport rights in Norway, Liechtenstein and Iceland pursuant to the European Social Entrepreneurship Funds Regulation (Regulation 346/2013) (EuSEF Regulation) and the European Venture Capital Funds Regulation (Regulation 345/2013) (EuVECA Regulation), when the EEA Agreement has been updated to include these regulations within its scope. “Latest News” Webpage. Opinion.
The FCA and the SEC published a memorandum of understanding (MoU) on July 19 on the supervision of the asset management industry, which came into force on July 22.
The accompanying press release states that the MoUs were concluded with 25 European Union (EU) and 3 European Economic Area (EEA) member-state regulators. They provide a framework for supervisory cooperation and exchange of information between the SEC and the EU/EEA member state national regulators in the asset management industry, as part of a long-term strategy to improve the oversight of entities in the industry that operate across national borders.
In May 2013, the European Securities and Markets Authority (ESMA) announced that it had approved cooperation agreements between EU regulators with responsibility for supervising Alternative Investment Funds (AIFs) and 34 of their global counterparts, including the SEC. These agreements are key in allowing the national regulators to monitor the way non-EU AIFMs comply with the AIFMD. Memorandum of Understanding. Press Release.
On June 11, the European Securities and Markets Authority (ESMA) published a final report on the guidelines on remuneration policies and practices under the Markets in Financial Instruments Directive (2004/39/EC) (MiFID) (ESMA/2013/606). Remuneration policies should be aligned with effective conflicts of interest management duties and conduct of business risk management obligations, in order to ensure that clients’ interests are not impaired by the remuneration policies and practices adopted by the firm in the short, medium and long term.
The final report also contains feedback received from ESMA’s September 2012 consultation on the draft guidelines and sets out material changes to the guidelines made by ESMA following consultation. Competent authorities to which these guidelines apply must notify ESMA whether they comply or intend to comply with the guidelines, stating their reasons for non-compliance where they do not comply or do not intend to comply, within two months of the date of publication of the translated versions by ESMA. Final Report.
On June 3, The European Securities and Markets Authority (ESMA) published its technical advice to the European Commission on the impact of the Short Selling Regulation (ESMA/2013/649). The advice includes:
- Current reporting and disclosure thresholds are correct, but technical improvements are suggested for the method for calculating net short positions in shares and for information provided to competent authorities and the public through the notifications of actively managed funds and on positions held through convertible bonds or subscription rights.
- Further clarifications for the exemption for market making activities. Areas for change include the scope of the exemptions and the conditions for being able to use them, particularly the trading venue membership requirement.
- The provisions for temporary bans when there are significant price falls should be reconsidered with a view to simplification and ensuring more consistency.
The advice will contribute to the Commission’s report on the review of the Regulation, which it is required to present to the European Parliament and the Council of the European Union by June 30. Technical Advice.
On June 6, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) published their final report setting out principles for benchmark-setting processes in the EU (ESMA/2013/659). The final report is divided into seven sections: General framework for benchmark setting; Principles for benchmark administrators; Principles for benchmark submitters; Principles for benchmark calculation agents; Principles for benchmark publishers; Principles for benchmark users and Principles for the continuity of benchmarks.
- The inter-bank lending rate, Libor, is one benchmark that will be affected by this report.
- Libor is the inter-bank offered rate currently set in London and is meant to reflect the average rate that banks pay to lend to each other.
The report follows the Libor scandal which emerged in June 2012 when UK and US authorities fined Barclays £290m for fixing the key inter-bank interest rate. Since then, Swiss bank UBS and Royal Bank of Scotland have been given fines of £940m and £390m, respectively. Final Report.