EUROPEAN UNION: ESMA Publishes Responses to the Consultation on Draft RTS under the ELTIF Regulation

Thursday October 22 2015

On 31st July 2015, the European Securities and Markets Authority (ESMA) issued a consultation paper concerning draft regulatory technical standards under the European long-term investment fund (ELTIF) Regulation. On 20^th October 2015, the European Securities and Markets Authority (ESMA) published the responses received to the Consultation.

The ELTIF Regulation provides that ESMA shall develop draft regulatory technical standards (RTS) to determine the criteria for establishing the circumstances in which the use of financial derivative instruments solely serves hedging purposes, the circumstances in which the life of a European long-term investment fund (‘ELTIF’) is considered sufficient in length, the criteria to be used for certain elements of the itemised schedule for the orderly disposal of the ELTIF assets, the costs disclosure and the facilities available to retail investors.

The consultation paper represented the first stage in the development of the draft RTS and set out proposals for their content.

Section 2 of the consultation paper explained the background to the proposals. Sections 3 to 9 gave detailed explanations on the content of the proposals and sought stakeholders’ input through specific questions.

Annex I set out the list of questions contained in the paper – Topics included within this list of questions were:

• the main risks that are necessary to be covered at the level of the ELTIF;
• the scope of risks that ought to be covered by the manager of the ELTIF;
• whether the approach to hedging should be tailored to the specific case of ELTIFs;
• eligible investments of the ELTIF; and
• RTS on Article 25(3) of the ELTIFs Regulation.

Annex II contained the legislative mandate to develop draft RTS;

Annex III provided for the cost-benefit analysis related to the draft RTS;

Annex IV contained the full text of the draft RTS.

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