ESMA has lately modified its AIFs and UCITS, which can be important to consider for individuals, who are working on obtainment of an AIFM license or starting an UCITS in the EU. The goal of the amendment is to harmonize ways in which managers of mentioned entities carry out fees for their activities. The new framework gives detailed instructions on regulation of the charged fees.
Within 90 days after the publication the updated conditions will be transformed to all languages of the European Union member states and published on the ESMA’s official website.
In the EU when a private investment fund is started its founders obtain the FMP status, meanwhile their UCITSs and AIFs are viewed as financial products.
ESMA announced publicly in 2020 that they are committed to issuing annual and semiannual reports regarding:
- EuSEF managers
- EuVECA managers
- UCITSs
- Self-governing investment-orientated UCITS entities
- AIFs registered outside EU
- Authorized AIFMs.
These reports will be extremely useful for those planning on registering UCITS in the EU or gaining a European license for managing AIF.
COVID-19
As stated by ESMA, the burden generated by managers of funds in the period of continuing pandemic of coronavirus need to be taken into consideration by NSA. More specifically, NSA is expected by ESMA to implement a risk-based approach and hold back from taking disciplinary measures against the mentioned market participants if they do not fulfill reporting deadlines.
During the pandemic that is still influencing the whole world, it can be useful to consult a lawyer from COREDO regarding reporting deadlines.
Individuals, who are planning on launching an investment project in the EU while the pandemic is still strong, should learn next facts:
- Since mid-February, the pandemic influenced grandly the major stock market and leaded to certain adjustments there. As a reason for that we can view a sudden decline in forecasts for enterprises, consumers, and the economic environment in general.
- Since ESMA relies a lot on remote work agreements, it is predicted that the operational risks are about to become higher. The risk growth depends on two factors: how much will COVID-19 influence the world economy and whether any other external events will occur.
- Together with market assessment, productivity by asset class has deteriorated, too. UCITS and ETF bonds needed to handle enormous outflows. Money market funds had to cope with serious complications. Many fund managers started using liquidity management tools.
In order to address the consequences of COVID-19 ESMA decided to take certain measures when it comes to these areas:
- Recommended actions to financial market participants during the pandemic
- Measures to regulate securities transactions
- MiFID / MIFIR sales measures
- Fund management periodic reporting
- Corporate disclosures
- Regulations.
AML / CTF
The NCA has been ordered by EBA to enforce AML by performing following actions:
- Supervisory activities should be planned realistically and effectively.
- Information on emerging AML / CTF risks must continue to be shared.
- Registering a credit institution or establishing a financial company in Europe during the pandemic should of course be done in accordance with risk lowering measures. Therefore, companies should modify their risk evaluations if needed.
A statement was published by FATF related to these recommendations:
- Supervisors and other law enforcement authorities are advised to share the AML risks information with the private sector.
- Using digital identification for final transactions is recommended for handling AML / CTF risks during the pandemic in a more efficient way.
Assistance in COREDO
Investment management during the COVID-19 pandemic leaves you with more and more questions? Our consultants in COREDO will be sure to answer them all and provide you with assistance through investment disputes in the EU.