Funds and asset management regulatory news, 7 June 2021

FIG Bulletin

Selected regulatory updates of interest to the funds and asset management sector on UK UCITS funds, EU AIFMD and EU UCITS Directive. See also our Related Materials links for regulatory updates of broad application.


Following a short break, the next update will be published on 21 June 2021.

UCITS funds: HM Treasury announces extension of PRIIPs exemption

HM Treasury has announced that the current exemption for Undertakings for the Collective Investment in Transferable Securities (UCITS) funds from the requirements of the UK retained EU law version of the Packaged Retail Investment and Insurance-based Products (PRIIPs)  Regulation (UK PRIIPs Regulation) will be extended by five years to 31 December 2026.

UCITS funds are currently exempted from the requirements of the UK PRIIPs Regulation. This means that, instead of producing a key information document (KID), UCITS funds providers must produce a key investor information document (KIID), as per the requirements of the UCITS Directive. This exemption expires on 31 December 2021.

HM Treasury intends to legislate to extend this exemption to 31 December 2026. This legislation will be made under a power HM Treasury was granted in the Financial Services Act 2021 to extend the current exemption by five years if required.

The announcement is being made now to provide certainty for industry and investors regarding the disclosures UCITS funds providers will have to make to retail investors beyond the end of 2021.

Although the current exemption will be extended by five years, depending on the findings of HM Treasury's review of the UK retail disclosure regime, changes to the UK PRIIPs Regulation may be made, or a successor regulation may be introduced, sooner than 2026. In this scenario, considerations would be made to ensure a smooth transition to the new regime for all retail investment product providers, including those marketing UCITS funds.

AIFMD: ESMA updates Opinion on reporting information

ESMA has updated its Opinion on the collection of information for the effective monitoring of systemic risk under the first sub-paragraph of Article 24(5) of the Alternative Investment Fund Managers Directive (AIFMD), in the context of AIFMD reporting.

In its opinion, ESMA provides details of a set of additional information that, in its view, national competent authorities (NCAs) could require AIFMs to report on a periodic basis pursuant to Article 24(5) the AIFMD. In particular, ESMA aims to provide clarification on three risk measures (value-at-risk, net FX delta and net commodity delta) which are already included in its Opinion in the section "Information on risk measures". ESMA has amended this section to provide guidance to alternative investment fund managers (AIFMs), with definitions of the aforementioned risk measures and practical examples for the reporting. The remainder of the Opinion that does not relate to these matters is unchanged.

ESMA has complemented the Opinion with three new Q&As which provide clarification on the reporting of three risk measures included in the AIFMD: Net DV01, NET CS01, Net Equity Delta (see below).

AIFMD: ESMA updates Q&As

ESMA has updated its Q&As on the application of the AIFMD. It has updated Q&As relating to reporting to national competent authorities under Articles 3, 24 and 42 of the AIFMD and its guidelines on performance fees in UCITS and certain types of alternative investment funds (AIFs). It has also added new Q&As relating to:

  • the risks measured by NET DV01, NET CS01 and Net Equity Delta;
  • the guidelines on performance fees in UCITS and certain types of AIFs, which came into force on 5 January 2021; and
  • setting performance reference periods.

UCITS Directive: ESMA updates Q&As

ESMA has updated its Q&As on the application of the UCITS Directive. Two new Q&As have been added relating to the performance reference period for the benchmark model and the performance reference period in case of funds' mergers.

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Authored by Yvonne Clapham


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