Asset Management Regulatory Roundup - July 2017, Issue 2

July 26, 2017

A compact summary of the most recent regulatory developments relevant to the UK asset management industry. This issue includes details on the updated Q&As published by ESMA in relation to the AIFMD and UCITS, IOSCO's consultation on recommendations for CIS liquidity risk management, new guidelines and Q&As published by the European Commission for PRIIPs, the new Prospectus Regulation and ESMA's consultation on the evaluation of the Short Selling Regulation.


AIFMD and UCITS: ESMA Updates Q&As  

The European Securities and Markets Authority (ESMA) has published updated questions and answers documents (Q&As) on the application of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS).

The AIFMD Q&As include three new questions and answers on the reporting requirements for:

  • loans purchased on the secondary market;
  • conversion of the total value of assets under management; and
  • currency of the net asset value.

The UCITS Q&As include two new questions and answers on:

  • issuer concentration; and
  • group links, independence and cooling-off periods.

LIQUIDITY RISK MANAGEMENT: IOSCO Consults on CIS Liquidity Risk Management Recommendations and Good Practices

The International Organization of Securities Commissions (IOSCO) has published a consultation on recommendations for liquidity risk management for collective investment schemes (CIS), including:

  • revisions to the existing recommendations relating to disclosure to investors, alignment between asset portfolio and redemptions terms, availability and effectiveness of liquidity risk management tools, and fund level stress testing;
  • additional recommendations on contingency planning; and
  • issues relating to exchange traded funds (ETFs).

IOSCO is also consulting on good practices for open-ended fund liquidity and risk management. This report covers practices aimed at ensuring consistency between the liquidity of a fund's assets and its liabilities, liquidity risk management tools and fund-level stress testing.

The deadline for responses to both consultations is 18 September 2017.

Read the IOSCO consultation on CIS liquidity risk management.

Read IOSCO’s Good Practices Consultation Report.

PRIIPs: Guidelines and Q&As 

The European Commission has published guidelines on key information documents for packaged retail and insurance-based investment products (PRIIPs). The guidelines are aimed at facilitating implementation of, and compliance with, the PRIIPs Regulation as well as improving consistent interpretation by defining various terms, such as ‘PRIIP manufacturer’.

Read the guidelines. 

ESMA and its fellow European Supervisory Authorities have published Q&As on the PRIIPs key information document (KID) covering presentation, content and review of the KID as well as the methodologies underpinning the risk, reward and costs information.

Read the Q&As. 

For a brief summary of the PRIIPs regime, please see Issue 1, Asset Management Regulatory Roundup.


As reported in the July 2017, Issue 1, Asset Management Regulatory Roundup, the new Prospectus Regulation will largely apply from 21 July 2019. However, some exemptions from the prospectus requirement apply from 21 July 2017 and 22 July 2018 respectively. These new provisions are summarized in Dechert’s OnPoint.

Read Dechert’s OnPoint: "Update on the New Prospectus Regime".  

SHORT SELLING: ESMA Consults on the Evaluation of the Short-Selling Regulation 

In evaluating the extent to which the SSR has achieved its original objectives, ESMA is seeking the views of market participants on the following three main elements of its advice to the European Commission (Commission):

  • the scope and functioning of the exemption for market making activities;
  • the procedure for imposing a short-term ban on short-selling; and
  • the transparency of net short positions and related reporting and disclosure requirements.

The closing date for responses is 4 September 2017 and ESMA expects to deliver its final advice to the Commission by 31 December 2017.

Read the consultation paper. 

ESMA Letter to the Commission on Third-Country Regimes

ESMA has written to the Commission providing its views on proposals for improvements to the way the EU deals with third countries on financial services. This letter is of particular interest in view of the UK’s decision to withdraw from the EU.

Read the letter. 


ESMA Publishes Opinions Supporting Supervisory Convergence

Further to its cross-sectoral opinion in May, ESMA has issued sector-specific opinions on the supervisory approach to Brexit-related relocations of MiFID entities, funds and fund management companies.

The opinions are aimed at ensuring a consistent interpretation of the requirements relating to authorisation, supervision and enforcement, to avoid regulatory and supervisory arbitrage.

ESMA stresses the need for local substance (including appropriate human and technical resources and adequate governance and internal controls). Also, regulators should consider which functions can be outsourced to a third country without impacting the substance or independence of firms. ESMA also asks regulators to scrutinize directors with multiple board appointments to ensure they meet their regulatory obligations.

Read the Opinion on investment firms. 

Read the Opinion on investment management. 

Read the Opinion on secondary markets. 

Read the Dechert Newsflash on this topic. 


ESMA has issued the following new Q&As on MiFID II and MiFIR:

New FCA MiFID II passporting forms

The FCA has published a new webpage on passporting under the MiFID II Directive.

Firms are required to make a new passporting application under MiFID II if they will be conducting activities that have been implemented as new MiFID II activities or if they will become newly authorised under MiFID II and need to passport from 3 January 2018.

The FCA recommends that firms should:

  • submit branch passport notifications as soon as possible after the MiFID II passporting gateway opens (on 31 July 2017); and
  • submit services passport notifications by 2 December 2017 to help the FCA to assess notifications and send them to relevant EEA regulators before MiFID II takes effect on 3 January 2018. The FCA warns that if it receives a notification after 2 December 2017 it cannot guarantee that it will be able to issue the relevant notification to the regulators concerned before 3 January 2018.

Read the webpage and forms. 

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