EUROPE: Commission publishes AIFMD delegated regulation on reporting by NCAs to ESMA

Thursday December 18 2014

The European Commission has adopted its Delegated Regulation on the information to be provided by competent authorities to the European Securities and Markets Authority (ESMA) pursuant to Article 67(3) of the Alternative Investment Fund Managers Directive (AIFMD).

Under Article 67(3) of the AIFMD, national competent authorities are required to report quarterly to ESMA information on the AIFMs that are managing or marketing AIFs under their supervision, either under the application of the passport regime or under their national regime. Such quarterly reporting to ESMA should also contain information needed for the assessment of the elements referred to in Article 67(2) of the AIFMD. This assessment should comprise the overall impact of the AIFMD on the European asset management market. In this context competent authorities should report all information that is relevant in identifying market disruptions and distortions of competition affecting the operation of all collective investment undertakings established in the Union as well as their managers. This entails information on the interaction between EU and non-EU collective investment undertakings and their managers not only within the Union but also oversees.

The Commission has issued in December 2013 a request for advice to ESMA on the possible content of the delegated act required by Article 67(5) of the AIFMD concerning the information that EU competent authorities have to provide quarterly to ESMA pursuant to Article 67(3) of the AIFMD. In response to that request, ESMA has submitted its technical advice to the Commission on 26 March 2014. ESMA’s advice has been discussed by the Commission with the European Securities Committee’s Expert Group (EG-ESC) on the meeting of 28 April 2014. The draft Delegated Act follows closely the advice delivered by ESMA, as well as subsequent discussions in ESMA’s Investment Management Standing Committee on first reporting that has already taken place on the basis of the ESMA advice.

The Delegated Act has the following structure:

• Definition of the scope of the reporting by competent authorities, identifying the three main topics: information concerning the functioning of the EU passport for EU AIFMs managing and/or marketing EU alternative investment funds (AIFs), information concerning the functioning of the marketing of non-EU AIFs by EU AIFMs in the Member States and the management and/or marketing of AIFs by non-EU AIFMs in the Member States in accordance with the applicable national regimes, information concerning the impact of the functioning of the EU passport systems and national regimes referred to previously.

• Information concerning the functioning of the EU passport for EU AIFMs managing and/or marketing EU AIFs – a list of information to be provided by competent authorities in order to allow the assessment of the use made of the “European passport”; the effectiveness of cooperation among competent authorities; the effective functioning of the notification system foreseen in Articles 32 and 33 of the AIFMD; investor protection issues related to AIFs marketed or managed from another Member State; the effectiveness of mediation by ESMA; and the effectiveness of the collection and sharing of information in relation to the monitoring of systemic risks.

• Information regarding the functioning of the marketing of non-EU AIFs by EU AIFMs in the Member States and the management and/or marketing of AIFs by non-EU AIFMs in the Member States in accordance with the applicable national regimes – this lays down a list of information on the applicable national regime concerning the marketing of non-EU AIFs by EU AIFMs in accordance with Article 36(1) of the AIFMD; the marketing of AIFs by non-EU AIFMs in accordance with Article 42(1) of the AIFMD; the management of EU AIFs by non-EU AIFMs; the existence and effectiveness of cooperation arrangements with third countries ; issues of investor protection in relation to marketing and management under the national regimes; problematic features of the third country regulatory and supervisory framework . The proposed Delegated Act also requires competent authorities to inform of any bilateral cooperation arrangement concluded with a supervisory authority from a third country.

• Information regarding the impact of the functioning of both systems.

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