Stock exchange – Deutsche Boerse
(BRUSSELS) – Negotiators from the EU Council and European Parliament reached political agreement last night on a proposal to improve the regulatory framework applicable to the investment funds industry.
The provisional agreement reviews the alternative investment fund managers directive, which governs managers of hedge funds, private equity funds, private debt funds, real estate funds and other alternative investment funds in the Union. It also modernises the rules in the framework for undertakings for collective investment in transferable securities (UCITS), i.e. plain-vanilla EU-harmonised retail investment funds such as unit trusts and investment companies.
Negotiators agreed to enhance the integration of asset management markets in Europe and to modernise the framework for key regulatory aspects.
Under the provisional agreement, negotiators decided to enhance the availability of liquidity management tools, with new requirements for managers to provide for the activation of these instruments. This will help ensure that fund managers are well equipped to deal with significant outflows in times of financial turbulence.
The Parliament and the Council also reached a provisional agreement on an EU framework for funds originating loans, i.e. funds that provide credit to companies, supplemented with several requirements to alleviate risks to financial stability and to ensure an appropriate level of investor protection.
Negotiators also agreed on enhanced rules for delegation by investment managers to third parties: this will enable them to better tap the best resources from market specialists, subject to reinforced supervision and preserving market integrity.
Other key components of the agreement include enhanced data sharing and cooperation between authorities, and new measures to identify undue costs that could be charged to funds, and hence their investors, as well as on preventing possible misleading names to better protect investors.
The agreement reached is provisional as it still needs to be confirmed by the Council and the Parliament before it can be formally adopted.
