EUROPEAN UNION: ESMA Thematic Study on Notification Frameworks and Home-Host Responsibilities under UCITS and AIFMD

Monday April 10 2017

One of the key objectives of ESMA is to foster and increase supervisory convergence across national competent authorities (NCAs). Thematic studies have been identified as a means of achieving this objective. Their aim is to review supervisory practice in the Member States, identifying good or best practices where possible. In 2016, ESMA conducted a thematic study on the operation of home and host responsibilities under AIFMD and UCITS with a view to promoting smooth operation of the EU passports for marketing and management, looking at the notification frameworks contained in the UCITS Directive and AIFMD.

Contents of the Report

Section 1 of the report illustrates the setting for the thematic study, as well as the procedure.

Section 2 provides an overview on the extent of cross-border management and marketing activities pursued by UCITS and their management companies in the EU, and assesses their supervision under the UCITS Directive. The report identifies a number of good practices around supervisory activities by NCAs, such as on cross-border services and cross-border collective portfolio management in the home and host Member State of the UCITS management company, on the supervision of compliance by branches of UCITS management companies when carrying out cross-border activities in a host Member State, and on the availability of required investor information when a UCITS is marketed on a cross-border basis.

Section 3 looks at cross-border management and marketing activities carried out by AIFMs in the EU, and provides an in-depth assessment of a number of issues around the supervision of those activities. In this section, good practices are identified regarding the influence of cross-border activity, including collective portfolio management, on the general supervisory approach pursued by NCAs. In addition, good practices are identified in regard to the supervision of the compliance of branches of EU AIFMs with the rules of conduct in host Member States of the AIFM, and on the supervision of AIF marketing activities carried out by AIFMs.

Section 4 provides a number of additional general findings on the administrative procedures around the passporting frameworks at national level. Besides looking at how NCAs receive and transmit passporting notifications, the report also assesses whether, how, and to what extent NCAs publish data on cross-border management. Additionally, the report includes a summary of difficulties linked with the day-to-day operation of the UCITS and AIFMD passporting frameworks, which were identified by competent authorities in the context of the thematic study.

Section 5 concludes the report with a brief summary of the findings made in the thematic study, focusing on the use of the passporting frameworks in EU Member States and on the supervisory and administrative activity around the notification frameworks.

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