AIFMD & UCITS Rules

With the most recent revisions to the UCITS (Undertakings for Collective Investment in Transferable Securities) and AIFMD (Alternative Investment Fund Managers Directive), the European Union has made tremendous progress toward improving its financial regulatory environment. The European Fund and Asset Management Association (EFAMA) has praised these improvements, which highlight the critical role these guidelines play in promoting a steady, effective, and resilient investment fund market throughout Europe.

The European funds business is undergoing a strategic transformation, marked by the harmonisation and strengthening of the AIFMD and UCITS directives, rather than merely little adjustments. This development is essential to the overall objectives of the Capital Markets Union initiative, which seeks to mobilize capital throughout Europe, as well as to investors looking for reliable platforms.

With the preservation of the delegation framework in the AIFMD and UCITS, the European Commission has demonstrated once again how dedicated it is to provide investors a wide range of investment options and chances for portfolio diversification. This is the basis of a vibrant and competitive market that gains from a wide array of investment approaches and managerial know-how.

While adding to the administrative burden, the implementation of additional reporting requirements to national authorities is intended to increase openness in the fund management industry. It is anticipated that this calculated action will increase the efficacy of supervision by providing national regulators with a more detailed understanding of market operations and delegation practices.

Furthermore, the legal changes provide a more flexible approach to fund depositaries' locations, enabling asset managers to choose depositaries in various EU member states under particular, carefully considered conditions. This flexibility is counterbalanced by thorough evaluations to guarantee that investment protection remains the top priority.

The European Union's commitment to developing a more competitive, integrated, and investor-friendly fund management environment is demonstrated by the regulatory improvements made to the UCITS and AIFMD directives. By upholding the highest standards of governance, transparency, and investor protection, the European fund industry is able to maintain its leadership position in the global investment management arena through the ongoing enhancement of these directives.

AIFMD & UCITS Directives: Future of EU Finance

With the recalibraration of the AIFMD (Alternative Investment Fund Managers Directive) and UCITS (Undertakings for Collective Investment in Transferable Securities), the European Union's financial sector is undergoing a major transformation. These changes, which have the support of the European Fund and Asset Management Association (EFAMA), go beyond just modifying the current regulations; rather, they represent a well-thought-out plan to support a robust and dynamic investment environment. The EU's ambitious money Markets Union project, which aims to unleash and facilitate the flow of money across the continent and ensure that funds are channeled where they are most needed, is directly aligned with such progressive steps.

Stabilising the Market: Preserving the Delegation Framework

• The continuity of the delegation framework under AIFMD and UCITS is a strategic choice by the European Commission.
• It guarantees a spectrum of investment choices, promoting a thriving economic landscape.
• This framework is instrumental for attracting a variety of international fund managers to the EU market, enriching the diversity and competitiveness of the financial sector.

Maintaining the delegation framework under the AIFMD and UCITS twin pillars is not just a regulatory preference; it is a proactive measure to uphold a dynamic market that supports investment diversification, which is essential for promoting economic growth. The European Union (EU) protects a legacy that has elevated its financial sector to the forefront of the world financial system by permitting fund managers to assign specific duties to experts, wherever they may be.

AIFMD & UCITS Rules: Reinforcing Reporting Standards

• Enhanced reporting obligations are introduced to foster a transparent environment for AIFMD and UCITS funds.
• Regulators are provided with more detailed insights into fund operations, improving the overall supervision framework.
• The move is set to bolster investor confidence by demonstrating a commitment to rigorous oversight and risk management.

More than just a compliance barrier, the tighter reporting requirements for entities under the AIFMD and UCITS directives represent a progressive step toward enhancing openness in the financial sector. Fund managers will surely have additional administrative work to perform as a result of this, but perhaps more significantly, it is expected to create a culture in which proactive risk management is the rule rather than the exception.

Encouraging Competitive Dynamics: Adjusting Depositary Rules

• The regulations now permit more flexibility in choosing fund depositaries across the EU.
• This change is expected to drive competition and innovation within the European funds market.
• Vigilant regulatory oversight ensures that the integrity of investor protection remains uncompromised.

It is a calculated tactical move for asset managers to be able to choose fund depositaries from a wider range of EU member states under the new regulatory framework. It not only gives asset managers the ability to look for the best and most affordable solutions, but it also encourages competition among depositaries, which is only good for the market as a whole. The fundamental element of this clause, though, is still its unshakable dedication to safeguarding investors' interests and making sure that any moves toward increased flexibility don't jeopardize the basis of confidence that supports the EU financial system.

Supporting the EU’s Economic Infrastructure: Aligning with the Capital Markets Union

• Regulatory enhancements to AIFMD and UCITS contribute to the Capital Markets Union's objective of an integrated EU financial market.
• They facilitate smoother capital flows and offer opportunities for investment diversification.
• These directives play a pivotal role in attracting investment and fostering economic cohesion across member states.

The goals of the Capital Markets Union, which include both financial integration and a stronger economic foundation for Europe, are strategically enhanced by the reform of the AIFMD and UCITS directives. By reducing red tape and strengthening the fund management industry, the EU shows itself as a force to be reckoned with when it comes to promoting economic convergence and serving as a model for investors throughout the world.

The EU's commitment to creating a more robust, competitive, and investor-friendly financial environment includes the improved AIFMD and UCITS frameworks as essential elements. These changes are a reflection of the Union's unwavering commitment to creating a market that is ready to satisfy future demands as well as those that are in line with current ones. With these adjustments, the EU reaffirms its position as a preeminent financial center, equipped to handle the changing global financial scene.

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Newly agreed AIFMD & UCITS rules will improve the EU funds market | EFAMA

As the EU Member States conclude technical discussions around the AIFMD & UCITS review, EFAMA would like to congratulate the European Commission and the co-legislators for keeping the key elements of both Directives intact during their review. These frameworks lie at the core of a well-functioning a…

EFAMA