Welcome to the Funds-Axis Regulatory Round Up!
This month’s regulatory round-up includes updates from:
- The FSB on Money Market Fund reform proposals
- The Central Bank of Ireland with amendments to the UCITS and AIFMD FAQs
- ASIC with guidance on crypto-asset related investment products
- The FCA with new rules on the Long-Term Asset Fund (LTAF) regime
October also saw the European Supervisory Authorities (ESAs) publish a call for evidence regarding the PRIIPs Regulation.
Continue reading below to find out more about these and many other recent regulatory developments.
The FSB has published the final Money Market Fund reform proposal. The report sets out policy proposals to enhance money market fund (MMF) resilience, including with respect to the appropriate structure of the sector and of underlying short-term funding markets. It reflects public feedback received on a consultative version of the report, which the FSB published in June 2021. The policy proposals form part of the FSB’s work programme on non-bank financial intermediation and are intended to inform jurisdiction-specific reforms and any necessary adjustments to the policy recommendations for MMFs issued by IOSCO.
On 29th October, the Central Bank issued the 35th edition of the Central Bank UCITS Q&A, which includes a new Q&A, ID 1104.
The new Q&A, ID 1104, sets out the Central Bank’s expectations in relation to the filing of Key Investor Information Documents (“KIIDs”) for UCITS which are implementing ESMA’s Performance Fee Guidelines with effect from 31 December 2021.
The European Supervisory Authorities (ESAs) are consulting on a call for evidence regarding the PRIIPs (Packaged retail and insurance-based investment products) Regulation.
The ESAs are requesting information from stakeholders on a range of topics including the practical application of the existing KID such as its use by financial advisors or the use of digital media, the scope of the PRIIPs Regulation and the degree of complexity and readability of the KID.
The call for evidence is open until 16 December 2021.
On 29 October, the Central Bank issued the 43rd edition of the Central Bank AIFMD Q&A, updating Q&A ID 1139.
The amended Q&A, ID 1139, sets out the Central Bank’s position in relation to non-financial instrument assets a Depositary of Assets other than Financial Instruments (DAoFI) may safe-keep. The list of permissible non-financial asset classes has been updated to include aircraft.
ASIC has released information for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products.
The information covers good practices for market operators in how they admit and supervise these products, and good practices for product issuers in how they establish and operate these products.
The Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) invited comments on their joint consultation report review of margining practices.
The report – which is part of the Financial Stability Board’s work programme to enhance the resilience of the non-bank financial intermediation sector – looks at margin calls in March and April 2020, margin practice transparency, predictability and volatility across various jurisdictions and markets, as well as market participants’ liquidity management preparedness.
The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have delivered to the European Commission (EC) their Final Report with draft Regulatory Technical Standards (RTS) regarding disclosures under the Sustainable Finance Disclosure Regulation (SFDR).
The draft RTS aims to:
- Provide disclosures to end investors regarding the investments of financial products in environmentally sustainable economic activities, providing them with comparable information to make informed investment choices; and
- Establish a single rulebook for sustainability disclosures under the SFDR and the Taxonomy Regulation.
The FCA has confirmed that it will be taking forward proposals to create a new type of open-ended authorised investment fund which will help support investment in assets like infrastructure and private equity.
The new rules create a Long-Term Asset Fund (LTAF) regime, a new FCA regulated fund that is designed specifically to help investment in assets including venture capital, private equity, private debt, real estate and infrastructure.
ESMA has published the compliance table on the guidelines on ESMA’s Guidelines on stress test scenarios under the MMF Regulation.
The majority of jurisdictions “comply” or “intend to comply” with the regulations. However, HCMC has stated that they do not intend to comply with the Guidelines on MMF stress tests because, in the view of the HCMC, certain sections of the Guidelines, including certain scenarios referred to in section 5 of the Guidelines rely solely on external credit ratings while external credit ratings should only be a complement to the MMF internal credit quality assessment referred to in article 19 of the MMFR.
ESMA has published the compliance table on the guidelines on liquidity stress testing in UCITS and AIFs.
All jurisdictions “comply” or “intend to comply” with the guidelines on liquidity stress testing in UCITS and AIFs.
The European Supervisory Authorities (ESAs) have developed through the Joint Committee (JC) draft Regulatory Technical Standards (RTS) with regard to the content and presentation of disclosures under Articles 8(4), 9(6) and 11(5) of the Sustainable Finance Disclosure Regulation (SFDR).
In line with the ESAs’ empowerments, the draft RTS have been developed in the following areas:
- According to Article 8(4) SFDR: Development of additional pre-contractual disclosures relating to the content and presentation of Article 8 SFDR products subject to Article 6 TR, concerning climate objectives and other environmental objectives under Article 9 TR respectively.
- According to Article 9(6) SFDR: Development of additional pre-contractual disclosures relating to the content and presentation of Article 9 SFDR products subject to Article 5 TR, relating to disclosures concerning climate objectives and other environmental objectives under Article 9 TR respectively.
- According to Article 11(5) SFDR: Development of additional rules on the content and presentation of information required under Article 5 and 6 TR for periodic disclosures relating to climate objectives and other environmental objectives under Article 9 TR respectively
On 15 October, the Packaged Retail and Insurance-based Investment Products (UCITS Exemption) (Amendment) Regulations 2021 (SI 2021/1149) were published, alongside an explanatory memorandum. The Regulations amend the retained EU law version of the PRIIPs Regulation ((EU) 1286/2014) to extend an existing exemption for management and investment companies and persons advising on, or selling, UCITS funds from the requirements of the PRIIPs Regulation. The current exemption will now be extended by five years, to 31 December 2026.
The Regulations will come into force on 31 December.
The Securities Exchange Commission (SEC) have published an official List of updated Section 13F Securities for Qtr II, 2021.
Click here for the latest 13F list.
Net short positions in UK sovereign debt and positions in uncovered UK sovereign credit default swaps (CDS) must be privately reported to us when these positions reach 0.5% of the UK outstanding sovereign debt and at each 0.25% increase or decrease after that.
The amount of the UK outstanding sovereign debt and the corresponding threshold is published by us and updated on a quarterly basis.
The FCA have updated the notification threshold for net short positions on UK Sovereign Debt.