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May Investment Management Update

May Investment Management Update

  • United Kingdom
  • Financial institutions - Asset managers and funds


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ESMA updates Q&A on MiFID II, AIFMD and UCITS


ESMA issued five Q&A documents in April on various MiFID II topics:

MiFIR data reporting: On 4 April 2017, ESMA published an updated version (dated 3 April 2017) of its Q&As on data reporting under MiFIR.

Investor Protection: On 4 April 2017, ESMA published an updated version of its Q&As on investor protection topics. The new version addresses best execution and inducements (research).

Market structures: On 5 April 2017, EMSA published an updated version of its Q&A on market structure topics.  This paper contains 22 new Q&As which mainly focus on Organised Trading Facilities (OTFs) and Systemic Internalisers (SI).

Commodity derivatives: On 5 April 2017, ESMA published an updated version of its Q&As on commodity derivatives. The Q&A provides guidance on a number of areas relating to position limits under MiFID II.

Transparency: On 5 April 2017, ESMA published an updated version of its Q&As on transparency topics. The new version focusses on general Q&As on transparency topics and contains one question on equity transparency. 


On 6 April 2017, ESMA published two updated questions and answers documents on the application of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS).

Both Q&A’s include one new question and answer:

  • AIFMD Q&A: cross-border marketing of EU AIFs by EU AIFMs under Article 32 of the AIFMD, clarifying that the AIF marketing passport may only be used for marketing to professional investors as defined in the AIFMD; and 
  • UCITS Q&A: cross-border activities by UCITS management companies, clarifying that a UCITS management company can notify cross-border activities without having to identify a specific UCITS.

ESMA findings on operation of home and host responsibilities under AIFMD and UCITS

On 7 April 2017, ESMA published the findings of its thematic study on notification frameworks and home-host responsibilities under the Alternative Investment Fund Managers Directive (AIFMD) and the UCITS IV Directive.  This report concludes the thematic study carried out in 2016 by ESMA.

ESMA’s findings include:

  • the extent to which the passporting frameworks are used varies extensively across the member states;  
  • the extent of UCITS management activities is mostly consistent with the size of national fund markets and the share the respective member state has in the single European fund market. Compared to cross-border management, the cross-border marketing of UCITS plays a significantly bigger role; and 
  • the statistics for the AIFM passporting frameworks mirror the above findings to some extent. While cross-border management activities are only carried out relatively extensively in a small number of member states, the use of the AIF marketing passport is more widespread. However, AIF managers make use of the AIFMD passports to a much lesser extent and in fewer member states, compared to the UCITS framework, reflecting the lower number of AIFs set up in Europe overall, the relatively short implementation period of AIFMD, as well as the late transposition of the AIFMD framework in a number of member states, and the limitations around cross-border marketing by way of the passport to professional investors only.

In general, notification frameworks and their administrative procedures are well-established and functioning at national competent authority (NCA) level on a daily basis.  However, good practices could be identified in a number of areas and are set out in the report.

NCAs have identified a number of other issues around the notification frameworks which did not form part of the assessment. Further work will be conducted by ESMA to enhance cooperation and supervisory convergence among NCAs on those issues.

FCA 2017/2018 Business Plan

On 18 April 2017, the FCA published its 2017/2018 Business Plan and Mission. In addition, for the first time, the FCA has published its Sector Views, which highlight the issues and developments the FCA sees in the sectors it regulates. Together, these documents provide greater clarity about how the FCA operates.

The FCA has made it clear that its focus is on making competition work in the investment management sector. Its rationale is that the size of the sector is significant (£7 trillion of collective institutional and individual assets managed by the sector) and that it has a direct impact upon consumers, either through their retail investments or their pension funds.

The FCA points out that they see the sector playing a key role in upholding overall market integrity and contributing to financial stability.  For more information about how the FCA business plan affects the investment management sector, see our recent briefing.

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