Financial Services Regulation and Compliance - Funds Jul 2021

DOMESTIC 

New cross-border distribution of funds regime from 2 August 2021

The new cross-border distribution of funds regime applies from 2 August 2021. The CBI published website guidance:

  • on the national laws, regulations and administrative provisions governing marketing requirements for UCITS and for AIFS
  • on the fees and charges levied by the CBI for marketing requirements for UCITS and for AIFS

CBI AIFMD Q&A and UCITS Q&A

The CBI issued an updated AIFMD Q&A and UCITS Q&A setting out the CBI's position on RAIFs and QAIFs and UCITS gaining exposure (directly or indirectly) to crypto-assets. 

AIFMs and UCITS ManCos with MiFID II top ups

AIFMs and UCITS ManCos with MiFID II top ups should continue to comply with their current prudential regime pending further engagement with the CBI on the prudential regime applying (in the context of the Investment Firms Directive and Investment Firms Regulation).

EUROPEAN & INTERNATIONAL

SFDR update to UCITS and AIFMD regime

An amending UCITS Directive and amending AIFMD Regulations were published in the OJ. From 1 August 2022, these will oblige AIFMs and UCITS ManCos to integrate sustainability risks and factors into their policies, procedures and operations.

EU Commission's proposals to amend the PRIIPs Regulation and the UCITS Directive.

The European Commission launched a consultation (closing 9 September 2021) on the proposal for a Regulation amending the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation. A key element of the proposal is the extension of the temporary UCITS exemption, by six months to 30 June 2022, from the requirement to provide retail investors with a key information document (KID) under the PRIIPs Regulation. This exemption applies to management companies, investment companies and persons advising on or selling UCITS and non-UCITS.

The PRIIPS RTS is not expected to be published until September.

Cross-border distribution of funds regime came into effect on 2 August 2021

ESMA submitted its first report on national rules governing the marketing of investment funds under the new cross-border distribution of funds regime in each member state. ESMA published translations of its guidelines on marketing communications under the new cross-border distribution of funds regime. These guidelines will apply from 2 Feb 2022.

European Commission Q&A on SFDR

The European Commission issued Q&As on sustainability-related disclosures. This was in response to questions that the ESAs forwarded to the Commission on SFDR. The Q&A responds to questions including:

  • the application of SFDR to registered (sometimes referred to as sub-threshold) AIFMs
  • the application of SFDR to non-EU AIFMs, for example when they market a sustainable EU AIF under a NPPR

UCITS & AIFMD Q&As updated for performance fee issues

ESMA added two new Q&As in respect of its guidelines on performance fees in UCITS and certain types of AIFs. The Q&As provide clarification on the application of the guidelines to funds with multiple portfolio managers and the crystallisation of performance fees.

ESMA reports on use of sanctions for UCITS and under AIFMD

ESMA published its fourth annual report on use of sanctions for UCITS and its second report on sanctions under AIFMD.

MMFs/ UCITS/ AIFs may be in scope of RTS setting criteria for shadow banking entities

The EBA is holding a consultation (closing 26 October 2021) on draft RTS setting criteria for the identification of shadow banking entities for the purposes of reporting large exposures. The RTS specifically consider the assessment of UCITS/ AIFs. MMFs are identified as shadow banking entities. The draft RTS also consider the position of entities established in third countries and provide for a treatment that distinguishes between banks and other entities.

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

Date published: 9 August 2021