Investment Funds: Upcoming Changes to EU Legislation for the Asset Management Industry?

12 June 2019

On 4 June 2019, Mr. Robert Ophèle, the Chairman of the French financial services regulator, the Autorité des Marchés Financiers (the “AMF”), delivered a speech at the Futures Industry Association’s International Derivatives Expo Conference in London (the “Speech”).

In the Speech, Mr. Ophèle stated that Brexit and the newly elected EU Parliament provided an opportunity for EU legislators to further amend the UCITS and AIFMD regimes. In particular, Mr. Ophèle called for:

  • Third-country rules to be reviewed, especially in relation to the delegation requirements and in particular, promoting a more collegial approach amongst the financial regulators in the EU Member States, with the aim of preventing “jurisdiction shopping”
  • Due to relocations by UK firms to different EU jurisdictions as a result of Brexit, greater convergence efforts are required from European Supervisory Authorities (“ESAs”), meaning adopting a more integrated approach to supervision by ESAs, better articulating the division of supervisory responsibilities between home and host Member State authorities, and increasing transparency and harmonisation of supervisory practices amongst ESA
  • Any EU legislation governing the asset management industry that gives rise to different interpretations needs to be clarified. In particular, Mr. Ophèle commented that the UCITS rules governing eligible assets and diversification should be “reviewed and modernised”
  • As part of the review of the AIFM Directive, a common set of rules should be defined, in order to clarify and harmonise obligations in areas such as the management of conflict of interest, Annex IV reporting, delegation, ancillary investment services and the definition of leverage

This Speech is important as post-Brexit, the influence of the AMF on EU legislation that impacts the asset management industry is likely to increase. Therefore, the suggestions made in this Speech may give some indication of future developments in EU legislation governing the asset management industry. Greater readability and convergence of legislation is to be welcomed as it should make EU legislation easier for non-lawyers to read. However, the cost of compliance of more regulation may not be welcomed by significant parts of the asset management industry.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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