Featured Product

    ESMA Finds Shortcomings in National Supervision of EPM by UCITS

    July 30, 2018

    ESMA published a report on the peer review on the guidelines on Exchange Traded Funds (ETFs) and other Undertakings for Collective Investments in Transferable Securities (UCITS) issues. ESMA found that national regulators need to improve their supervision of UCITS engaging in efficient portfolio management techniques (EPM). ESMA will follow up on the findings of this peer review in 24 months to assess the progress made by the national competent authorities.

    This report presents findings regarding compliance of the assessed national competent authorities with the guidelines, identifies good practices of supervisory tools and measures that may be of interest to other national competent authorities, and highlights areas where follow-up policy work may be considered by ESMA to take into account changes in the regulatory framework and to address open questions concerning the application of the guidelines. The peer review assessed six national competent authorities from Estonia, France, Germany, Ireland, Luxembourg, and the United Kingdom. Based on the guidelines, besides identifying some good practices, ESMA found deficiencies in the national supervision of UCITS engaging in EPM. The findings of the peer review relate in particular to the supervisory practices regarding operational aspects of costs, fees, and revenues for EPM and collateral management issues. ESMA calls for national competent authorities to:

    • Ensure a more systematic and formalized review of the required EPM disclosures, allowing investors to better understand funds’ EPM engagement, the risks involved, and the cost and fee policy concerning EPM. This finding is relevant for all reviewed national competent authorities and particularly for Estonia and the UK.
    • Provide more comprehensive internal supervisory guidance on costs, fees, and revenues regarding EPM. This finding is relevant for all reviewed national competent authorities.
    • Ensure that all net revenues from EPM are returned to the investors. This finding is particularly relevant for Germany and Luxembourg regarding revenue splits between investors, fund managers, and their service providers.
    • Revise existing national exemptions to the guidelines on collateral requirements granted in the UK and Germany so that fund assets can only be used for EPM purposes where UCITS receive high-quality and liquid collateral, in accordance with the standards set out in the ESMA Guidelines.

     

    Related Links

    Keywords: Europe, EU, Securities, UCITS, ETFs, Guidelines, Peer Review, ESMA

    Related Articles
    News

    FSI Paper Examines Use of Suptech Initiatives by Financial Authorities

    The Financial Stability Institute (FSI) of BIS published a paper that examines the suptech developments by analyzing suptech initiatives of 39 financial authorities globally.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Consult on Policy Statement on Allowance for Credit Losses

    US Agencies (FDIC, FED, NCUA, and OCC) are consulting on the policy statement on allowances for credit losses and on the guidance on credit risk review systems.

    October 17, 2019 WebPage Regulatory News
    News

    PRA Consults on Approach to Supervising Liquidity and Funding Risks

    In consultation paper (CP27/19), PRA published a proposal (CP27/19) to update the supervisory statement SS24/15 on the PRA approach to supervising liquidity and funding risk.

    October 17, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation and Impact of G20 Financial Reforms

    FSB published fifth annual report on the implementation and effects of the G20 financial regulatory reforms.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Launches Consultation on Comprehensive Pillar 3 Disclosures

    EBA proposed the new comprehensive implementing technical standard (ITS) for public disclosures by financial institutions.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Consults on Revised Technical Standards on Supervisory Reporting

    EBA launched a consultation on the revised implementing technical standards, or ITS, on supervisory reporting.

    October 16, 2019 WebPage Regulatory News
    News

    BoE and FCA Examine Use of Machine Learning in Financial Sector in UK

    BoE and FCA published a report on the results of a joint survey by BoE and FCA in 2019 to better understand the use of machine learning in the financial services sector in UK.

    October 16, 2019 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel Framework

    BCBS published the seventeenth progress report on adoption of Basel regulatory framework.

    October 16, 2019 WebPage Regulatory News
    News

    APRA Proposes Measures to Strengthen Capital for Bank Depositors

    APRA proposed changes to APS 111, which is the prudential standard on measuring capital adequacy and establishes the criteria for regulatory capital requirements of authorized deposit-taking institutions.

    October 15, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Technical Advice for the 2020 Review of Solvency II

    EIOPA is consulting on an opinion that sets out technical advice for the 2020 review of Solvency II.

    October 15, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3981