EUFSC’s role in the area of fund management has included issuing technical advice to the European Commission, developing guidelines, preparing regulatory and implementing technical standards, and issuing opinions, Q&As and ad-hoc reports.
Although the bulk of EUFSC’s work in the fund management area relates to UCITS and AIFMD, ESMA also carries out work in relation to European Venture Capital Funds (EuVECA), European Social Entrepreneurship Funds (EuSEF), European Long-term Investment Funds (ELTIF) and Money Market Funds (MMFs).
The Alternative Investment Fund Managers Directive (AIFMD) includes the rules governing funds that are not UCITS, including hedge funds, private equity funds, and real estate funds. The Money Market Fund Regulation (MMFR) sets out the regulatory framework aimed at ensuring the stability and integrity of money market funds. Under each of the frameworks a number of data reporting obligations have been established.
The AIFMD requires detailed reporting to the competent authorities, including information in relation to principal markets on which an AIFM trades, instruments traded, principal exposures, important concentrations, illiquid assets, special arrangements, risk profiles, risk management systems, stress testing results, a list of all AIFs managed, leverage in the AIFs and sources of leverage.
EUFSC published its final guidelines on the reporting obligations for Alternative Investment Fund Managers (AIFMs) on 8 August 2014 to provide clarifications on the information that AIFMs must report to national competent authorities (NCAs) who will subsequently transmit it to EUFSC to ensure effective supervision within the Union. ESMA has also issued a Q&A document on the Application of the AIFMD which provides further detail on the AIFMD requirements including the reporting and disclosure provisions. This document is updated as new questions arise.
EUFSC also developed IT guidance that complement the information included in the Guidelines so that managers of AIFs have all the necessary information to fill in the reporting template they will send to their competent authority, as specified under articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD. Each AIFM should contact directly the NCAs to know how the filling of the AIFMD reports will be handled at national level.
The UCITS Directive is a detailed, harmonised framework for investment funds that can be sold to retail investors throughout the EU. This means that funds authorised in one Member State can be marketed in another Member State using a passporting mechanism. Originally introduced in 1985, the UCITS rules have been revised several times, most recently via the UCITS V Directive which came into force on 18 March 2016. UCITS V aims to bring the UCITS regime into line with the AIFM Directive on remuneration and depositary rules and introduce a range of corresponding measures: it clarifies the depositary role, introduces rules on remuneration policies to be applied to key members of the UCITS management company’s staff and harmonises minimum administrative sanctions for infringements to the UCITS rules.
UCITS are a very successful product: there are more than 30,000 UCITS funds in the EU which represent over €9 trillion of assets under management.
▸ To report about an infringement of national provisions transposing the UCITS Directive, please consult the Whistleblowers section.
The AIFMD applies to managers of funds that are not UCITS, including hedge funds, private equity funds, and real estate funds. Alternative investment funds can be sold to professional investors throughout the EU on the basis of a passport. The AIFMD is notable for the detailed regulatory reporting regime that it introduced, which requires managers to submit an extensive set of information to their national authorities on aspects such as their investment portfolios, leverage and collateral. Another important element of the AIFMD – and of EUFSC’s work on the Directive – relates to third countries, and more specifically the possibility for the EU passport to be extended to non-EU funds and managers. Should such a passport be introduced, EUFSC will have an important role to play in the smooth functioning of this new mechanism.
An important part of the AIFMD is the AIFMD reporting.