Asset Management & Investment Funds: EU & International Developments – March 2025

Delays for ESMA work on AIFMD II, UCITS Eligible Assets and MiFID II

The European Securities and Markets Authority (ESMA) published a letter to the European Commission with details of a number of its 2025 deliverables which are being deprioritised and postponed. This will free up resources for ESMA’s highest priority workstreams. The full list of deprioritised or postponed deliverables are set out in the annex to ESMA’s letter.

Deprioritised workstreams (with rescheduled delivery dates) include:

• AIFMD II: RTS on open ended loan originating alternative investment funds (initial deadline was 16 April 2025; delayed by six months)
• AIFMD II: Guidelines to specify the circumstances in which the name is unfair, unclear or misleading (initial deadline was 16 April 2025; delayed by at least 12 months)
• UCITS Eligible Assets Directive: Technical advice on eligible assets (original deadline was October 2024, delayed to April 2025; now delayed by a further three months)
• MiFID II / MiFIR review: RTS on CTP incidents statistics reporting (initial deadline was 1 September 2025; delayed by three months)
• MiFID II / MiFIR review: RTS on order execution policies (initial deadline was 29 December 2024; delayed by six months).

Savings and investments union

The European Commission (Commission) adopted its strategy for the savings and investments union (SIU), aimed to improve the way the EU financial system channels EU citizens’ savings to productive investments. It seeks to offer EU citizens broader access to capital markets and better financing options for companies. The Commission’s proposed policy measures are grouped under the headings:

• citizens and savings
• investments and financing
• integration and scale
• efficient supervision in the single market

The SIU also aims at enhancing the integration and competitiveness of the EU banking sector.

The Commission’s proposed policy measures of relevance to the investment funds and asset management sector include:

• Adoption of measures (legislative or non-legislative) by Q3 2025 to create a European blueprint for savings and investments accounts or products based on existing best practice
• By Q4 2025 measures to stimulate equity investments by institutional investors
• By Q3 2026, a review and upgrade of the EuVECA Regulation, including by widening the scope of investable assets and strategies
• In Q4 2025 propose legislation to remove remaining barriers to the distribution of EU-authorised funds across the EU and propose measures to reduce operational barriers affecting cross border groups
• A potential review of the Shareholders Rights Directive by Q4 2026 to make it easier for investors, intermediaries and issuers to operate across Member States
• European supervisory authorities and national competent authorities to make full use of currently available supervisory convergence tools and implement the simplification agenda
• In Q4 2025 measures to strengthen supervisory convergence tools and make them more effective
• Proposals in Q4 2025 to achieve more unified supervision of capital markets as indicated in the Competitiveness Compass, including by transferring certain tasks to the EU level

In Q2 2027, the Commission will publish a mid-term review of the overall progress in achieving the SIU.

Money Market Fund stress testing

ESMA’s 2024 Guidelines on stress test scenarios under the Money Market Fund Regulation (2024 Guidelines) apply from 24 April 2025.

On 24 February 2025, ESMA published the official translations of its 2024 Guidelines.

The parts of the guidelines shown in red text in the 2024 guidelines will apply from 24 April 2025 (being two months after publication of the translations). The other parts of the guidelines already apply from the dates specified in Articles 44 and 47 of the MMF Regulation.

ESMA published the final report on its guidelines in January 2025. Section 4.8.5 on macro systemic shocks and section 5 on the calibration of the guidelines have been updated. The rest of the guidelines are largely unchanged.

Under Article 28 of the Money Market Funds Regulation these guidelines are updated by ESMA (with the European Systemic Risk Board (ESRB) and the European Central Bank (ECB)) at least every year to reflect latest market developments.

ESMA report on the impact of size on EU fund costs in the investment fund industry.

ESMA published a study examining how size affects costs in the European investment fund market, comparing it with the US market.

Findings include:

• both individual share class size and parent company size significantly influence share class costs, though these effects vary between markets
• a negative correlation between share class size and costs in both markets, indicating economies of scale, but the relationship is stronger in the US market
• the correlation between parent company size and costs is negative in both the EU and in the US and the coefficients are nearly identical, suggesting that managers of European funds are equally effective in leveraging organizational scale

These findings have important implications both from a policy and investor protection perspective.

• At policy level, results suggest that greater consolidation could = assuming unimpaired competition = benefit European investors through cost efficiencies.
• From an investor protection perspective, the analysis suggests that investors should still consider costs carefully when taking investment decisions and awareness of fund costs and their potential drivers is key.

You can find ESMA’s presentation and recording here.

Omnibus Simplification Package 

The eagerly awaited omnibus package on sustainability has been published by the European Commission. This package contains proposals to amend the following existing legislation:

• the Corporate Sustainability Reporting Directive (CSRD) by way of two amending Directives
• the Accounting Directive by way of an amending Directive
• the Audit Directive by way of an amending Directive
• the Corporate Sustainability Due Diligence Directive (CSDDD) by way of two amending Directives
• the Carbon Border Adjustment Mechanism (CBAM) by way of an amending Regulation
• the InvestEu Regulation by way of an amending Regulation

as well as launching a consultation process on a draft Taxonomy delegated act.

You can read our analysis here.

ESMA analysis of AI in EU investment funds and IOSCO consultation

ESMA published a Trends, Risks and Vulnerabilities Risk report on the impact of artificial intelligence (AI) and its recent advancements in the EU investment management industry.

First, it studies the operational use of AI by fund managers i.e. the extent to which the adoption of AI tools by asset manages plays a role in the investment process. Second, it assesses the portfolio allocation of AI-related companies by EU investment funds.

On 12 March 2025, the International Organization of Securities Commissions (IOSCO) published a consultation, produced by its Fintech Task Force, on AI use cases, risks and challenges in capital markets.

Iosco’s last report was published in September 2021. Comments are invited until 11 April 2025.

AML/CFT/FS

Wolfsberg Group FAQs on Defining Digital Assets

The Wolfsberg Group issued Digital Assets FAQs. The FAQs aim to assist financial institutions with assessing the risks generated by the emergence of digital assets for anti-money laundering and anti-terrorist financing for ML/TF purposes by proposing definitions in these FAQs with the understanding that the continued evolution of these technologies will warrant periodic review of these terms.

The Wolfsberg Group is an association of 12 global banks which first met in 2000 and which aims to develop frameworks and guidance for the management of financial crime risks.

AML/CFT package consultations

The European Banking Authority (EBA) launched a public consultation on four sets of draft regulatory technical standards (RTS) that are required under the EU’s new AML/CFT legislative package. See the consultation paper here.

The EBA’s consultation requests feedback on the following four RTS’:

• draft RTS on harmonised ML/TF risk assessments
• draft RTS on customer due diligence requirements
• draft RTS on the selection of institutions for direct supervision by the EU Anti-Money Laundering Authority (AMLA)
• draft RTS on pecuniary sanctions, administrative measures and periodic penalty payments

The consultation closes on 6 June 2025.

The EBA will hold a virtual public hearing on the consultation paper on 10 April 2025 at 14:00 CET. The EBA invites interested stakeholders to register using this link by 8 April 2025 at 16:00 CET.

For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.