16.04.2018 | KPMG Law Insights

Investment | Law | Compact – Issue 04/2018

Dear Readers,

BaFin has taken a position on the question of whether a real estate company can also qualify as an AIF at the same time. This is affirmed under certain conditions. Meanwhile, ESMA is continuously adding to its Q&A catalogs on European financial market regulation. As usual, we point out relevant updates.

The European Securities and Markets Authority has also compiled an overview of all the guidelines it has issued. The links contained therein provide access to consultation documents together with comments from market participants, the final reports, translations and information on implementation in the individual countries.

Following BaFin’s announcement that it would generally follow ESMA’s interpretations in its administrative practice, it has now also declared that it will apply ESMA’s guidelines on product monitoring requirements under MiFID2.

With warm regards,
Henning Brockhaus

National supervision

BaFin Interpretative Decision on the Acquirability of AIFs as Real Estate Companies under the KAGB

On April 9, BaFin announced its administrative opinion on the question of whether, under the KAGB, AIFs in the corporate form of real estate companies can also be acquired for real estate investment funds pursuant to sections 231 et seq. KAGB or for open-ended special AIFs with fixed investment conditions pursuant to section 284 KAGB.

For this purpose, the supervisory authority has specified the following minimum requirements:

  • The AIF must have a corporate form that is compatible with the requirements of the KAGB;
  • The participation of the KVG in the real estate company must be a membership participation;
  • The AIF management company must have the majority of votes and capital in the real estate company required to amend the articles of association.

The other requirements for the acquisition of real estate companies under the KAGB must be observed in the same way as the other relevant requirements in the investment sector.

You can find BaFin’s detailed interpretative decision with further guidance here.

European supervision

ESMA revises Q&A catalog on MiFID2 investor protection topics

ESMA has updated its Q&A catalog on MiFID2 investor protection topics.
Additions have been made in particular to the topics of research, post-trade reporting and cost transparency with regard to grants.
You can access the current version of the Q&As here.

National supervision

BaFin applies ESMA guidelines on product monitoring

BaFin published a statement on March 23, 2018, stating that it will apply ESMA’s guidance on MiFID2 product monitoring requirements.

The guidelines specify the requirements for product monitoring. The requirements for target market definition for financial products play a central role here.

You can access the German version of the guidelines here.

European supervision

ESMA updates various Q&A catalogs

The ESMA has on 21. and March 22, 2018 published updated Q&A catalogs on the Benchmark Regulation, Market Abuse Regulation and Central Administrator Regulation:

  • Benchmark Regulation: Q&As regarding the implementation of the Benchmarks Regulation (BMR);
  • Market Abuse Regulation: Q&As on the implementation of the Market Abuse Regulation (MAR) and
  • Central Securities Depository Regulation: Q&As regarding the implementation of the Central Securities Depository Regulation (CSDR).

European legislation

Implementing regulation for ELTIFs published in the Official Journal

On March 23, 2018, the Implementing Regulation for European Long-Term Investment Funds (ELTIFs) was published. It entered into force on April 12, 2018.
The Implementing Regulation provides details on the use of hedging derivatives (Article 1), the maturity of an ELTIF (Article 2), the criteria for assessing the buyer market (Article 3), the valuation of assets to be sold (Article 4) and facilities for retail investors (Article 5).
The implementing regulation can be found here.

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