EUROPE: FESE Position Paper on European Long&#8208term Investment Funds

Tuesday October 22 2013

The Federation of European Securities Exchanges (FESE) has published a Position Paper on the newly proposed European Long‐term Investment Funds framework. On 26 June 2013, the European Commission proposed a new investment fund framework designed for investors who want to put money into companies and projects for the long term. These private European Long-Term Investment Funds (ELTIFs) would only invest in businesses that need money to be committed to them for long periods of time.

FESE has agreed that such a framework would have a clearly positive impact on the European economy and that long‐term assets are not limited to infrastructure investments and include more generally all investments with a long‐term positive impact on the sustainable development of the economy.

However, FESE has emphasised that the draft Regulation, in its current form, will not achieve its purpose because its scope of eligible assets excludes any instrument listed on regulated venues. This means that thousands of companies issuing well‐regulated, transparent instruments will be excluded from the benefit of a larger investor pool in their assets created by the ELTIF framework. The main recommendations put forward in the Paper include:

• Any threshold differentiating between listed and unlisted instruments should be removed. There is no reason to limit investing in listed instruments to 30 percent of an ELTIF portfolio.
• Listed Small and Medium Enterprises (SMEs) should be expressly in the scope of eligible investments. If a threshold of size were to be used to define an SME, FESE has suggested a range between 500 million and 1 billion EUR, based on the difficulties reported by SMEs below these sizes when accessing capital markets.

Click on the below link for the full report.