Dear Readers,
It’s vacation and travel season and the weather in many parts of Germany is inviting you to take a vacation abroad. Meanwhile, European regulators give the impression of being tireless and current consultations with ambitious deadlines are an invitation to think outside the box.
BaFin has submitted a draft amendment to the Capital Investment Accounting and Valuation Ordinance (KARBV) and a draft amendment to the Capital Investment Audit Reports Ordinance (KAPrüfbV) for consultation.
Furthermore, the regulation on money market funds, which contains provisions on the procedure for the authorization of AIF money market funds, was adopted. In addition, the EU Commission presented a proposal for a regulation for a new European private pension product (PEEP).
There are also current developments in connection with issues relating to the AIFM Directive; you will find a compilation of these in this issue.
We wish you an insightful reading and remain
With best regards
Dr. Ulrich Keunecke
European Council and Parliament of the EU
Publication of the Money Market Fund Regulation in the Official Journal of the EU
On June 14, 2017, the European Council and the Parliament of the EU adopted the Money Market Funds Regulation (Regulation (EU) 2017/1131 of the European Parliament and of the Council of June 14, 2017 on Money Market Funds (“MMFR”)). This will apply from July 21, 2018.
The aim of the MMFR is to ensure the liquidity and stability of money market funds in crisis-ridden market environments, thereby reducing systemic risk and strengthening investor protection.
Gem. Art. 1 para. 1, the MMFR applies to UCITS or AIFs that invest in short-term assets and have individual or cumulative objectives based on returns in line with money market rates or the stability of the value of the investment.
The MMFR contains provisions on the procedure for the authorization of AIF money market funds. An AIF is authorized acc. Art. 5 par. 1 MMFR only if the competent authority for the MMF approves the application of an AIFM already authorized under Directive 2011/61/EU to manage the AIF MMF, the fund rules and the choice of depositary.
Related links
The publication in the EU Official Journal can be viewed here.
BaFin
Consultation 06/2017 – Circular on the implementation of the ESMA/EBA guidelines on complaint handling
On 27.05.2014, the Joint Committee of the European Supervisory Authorities issued “Guidelines on complaints-handling for the securities (ESMA) and banking (EBA) sectors” (Doc. No. JC 2014 43, “Complaints Guidelines”). In order to ensure adequate consumer protection, the Complaints Guidelines are intended to clarify expectations regarding the organization of complaints handling in the supervised entities, provide guidance to complainants on the provision of information, provide guidance on complaint handling procedures, harmonize the arrangements for handling all complaints received and ensure that supervised entities’ complaints handling arrangements demonstrate a minimum level of supervisory convergence across the European Union.
Against this backdrop, BaFin has issued a draft circular for consultation regarding the processing of customer complaints. The requirements of the circular apply to all KVGs that manage UCITS and public AIFs.
Written comments on the circular can be submitted until 04.08.2017.
Related links
Further information can be found here and here.
EU Commission
Proposal for a regulation for a new pan-European private pension product (PEEP) and recommendation to the member states on tax treatment
On June 29, 2017, the EU Commission presented a proposal for a regulation for a new European private pension product (PEPP), as announced in the mid-term report on the Capital Markets Union Action Plan.
PEPPs are intended to complement, but not replace or harmonize, existing statutory, occupational and national private pension schemes by introducing a new product category. They should have uniform features across the EU and offer savers greater choice in their pension provision and ensure solid consumer protection:
- Consumers will benefit from strict customer information requirements and sales regulations, which will also apply to online sales. Providers will require authorization from the European Insurance and Occupational Pensions Authority (EIOPA) for PEPP distribution.
- For savers, the PEPP will come with a high level of consumer protection thanks to a simple standard investment option where at least the capital invested is guaranteed.
- Savers will have the right to switch providers every five years at capped costs, using companies in their own country or in other member states.
- PEPPs should be portable, i.e. PEPP savers should be able to continue paying into their contract even if they move to another member state.
- A wide range of providers will be given the opportunity to operate in the market for private pension products.
- Providers will be able to market PEPPs in several Member States, pool the funds collected more efficiently and achieve economies of scale. PEPP providers will be able to reach consumers across the EU via electronic distribution channels.
- PEPP providers and savers will be able to choose between different payment options at the end of the product term.
To facilitate cross-border distribution, PEPP providers will be able to use a European passport.
Related links
The press report can be viewed here.
EIOPA
Consultation on the first “Set of Advice” on the revision of Solvency II
On July 4, 2017, EIOPA published a consultation paper on initial advice to the EU Commission on the revision of Solvency II.
The main objectives of the consultation are:
- Ensuring a proportional and technically uniform supervisory regime for insurance companies and
- Review of possible simplifications of the SCR requirements according to the standard formula and proportionality of the application of the requirements.
The consultation period ends on 31.08.2017.
Related links
The EIOPA report can be viewed here.
IOSCO
Launch of two consultations on the management of liquidity risks in investment funds and open-ended investment funds
On July 6, 2017, IOSCO published the following consultation papers:
- Consultation on CIS Liquidity Risk Management – Recommendations
- Open-ended Fund Liquidity and Risk Management – Good Practices and Issues for Consideration – Consultation Report
Comments are possible until 18.09.2017.
Related links
The corresponding IOSCO press release can be viewed here.
ESMA
Publication of updated Q&A on the AIFM Directive
On 11.07.2017, ESMA published updatesto the above-mentioned question/answer catalogs.
The AIFMD Q&A catalog contains three new questions and answers on the reporting requirements for:
- loans obtained on the secondary market;
- conversion of the total value of the assets under management; and
- the currency of the net asset value.
Related links
The catalog can be viewed here.
EU Commission
Publication of the EU Commission’s guidelines on the application of the PRIIPs Regulation in the EU Official Journal
The EU Commission’s guidelines on the application of Regulation (EU) No. 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) were published in the EU Official Journal on July 7, 2017.
The key information documents create a common standard for the provision of information to retail investors and enable them to compare the key features and risks, potential performance and costs of PRIIPs and make an informed investment decision on this basis.
The guidelines are intended to ensure a uniform interpretation of the provisions in the Union.
Related links
The publication in the EU Official Journal can be viewed here.
High-Level Expert Group on Sustainable Finance
EU expert group on sustainable financing presents interim report
On July 13, 2017, the High-Level Expert Group on Sustainable Finance presented an interim report on sustainable finance.
The interim report proposes swift action on the following points, among others:
- a classification system for sustainable forms of investment,
- a European standard and labeling for green bonds
- more transparency on the part of financial institutions and companies as to how sustainability is incorporated into decision-making processes and a “sustainability test” for relevant EU financial market regulations.
The Commission will examine the recommendations.
Related links
The press report of the High-Level-Group can be viewed here.
Payment services
Act implementing the Second Payment Services Directive published in the Federal Law Gazette
The Act Implementing the Second Payment Services Directive was published in Federal Law Gazette No. 48 on 21.07.2017. This act amends a large number of laws, including the Payment Services Supervision Act, the Securities Prospectus Act, the Banking Act, the Insurance Supervision Act and the Auditors Act. The amendments come into force at different times.
Related links
You can find the reading version of the law under this link.
EBA
EBA publishes Final Guidelines in connection with the Payment Services Directive PSD2
The EBA published the “Final Report: Guidelines on major incident reporting under Directive (EU) 2015/2366 (PSD2)” on July 27, 2017. The guidelines were developed in close cooperation with the ECB. They are valid from 13.01.2018.
Related links
You can find here the press release of the EBA with a further link to the guidelines.
BaFin
BaFin Consultation 07/2017 – Amendment of the Capital Investment Accounting and Valuation Ordinance and the Capital Investment Audit Reports Ordinance
BaFin has published a draft amendment to the Capital Investment Accounting and Valuation Ordinance (KARBV) and a draft amendment to the Capital Investment Audit Reports Ordinance (KAPrüfbV) for consultation. The background to this is the law implementing the UCITS V Directive, the fifth directive on undertakings for collective investment in transferable securities, which has introduced new regulations for the granting of loans and investments in unsecuritized loan receivables for the account of certain investment funds.
The consultation ends on 15.08.2017.
Related links
You can find all further information here.
ESMA
ESMA opinion on the safekeeping of investment funds and custody services
ESMA has issued an “Opinion” g to clarify the legal provisions of the AIFMD Directive 2011/61/EU and the UCITS Directive 2009/65/EC with regard to the safekeeping of securities in the case of delegation of custody services to the EU Commission and Parliament.
Related links
You can find all further information here.
