20.12.2016 | KPMG Law Insights

Investment Law – Investment | Law | Compact – Issue 12/2016

Dear Readers,

Transparency is the background of some regulation. This is also the case with the Regulation on Transparency of Securities Financing Transactions (SFT Regulation). The new disclosures are already applicable to fund reports published after January 13, 2017. BaFin has now clarified this.

In addition, we report in today’s issue on ESMA’s statement that marketing should be seen as an outsourcing of an AIFM, as it is listed in Annex I of the AIFM Directive under the activities of an AIFM.

The German supervisory authority has recently taken a different position on this and strengthened the view of the German fund industry. Further developments therefore remain to be seen.

A year full of hustle and bustle in Brussels and Berlin lies behind us. One thing is certain: next year will be no less exciting. The implementation of MiFID2 is also entering its decisive phase: there are then 12 months left until the application date.

We wish you happy holidays and a prosperous new year!

With warm regards

Henning Brockhaus


BaFin follows ESMA interpretation: Date of report publication is decisive for application of SFT Regulation

In our October issue we reported on an addition to the Q&A catalog on the AIFM Directive, in which ESMA clarified that the new EU requirements on transparency of securities financing transactions (Regulation (EU) 2015/2365 on transparency of securities financing transactions and re-use and amending Regulation (EU) No. 648/2012, SFT Regulation) would be applicable for the first time to fund reports published after January 13, 2017.

However, the wording of ESMA’s comments caused confusion. It was unclear whether reports must also include the added information if they are published after January 13, 2017, but relate to fiscal years that ended before that date.

This has now been confirmed by BaFin. It focuses on the date of publication and thus follows ESMA’s interpretation. For reports with a cut-off date of September 30, 2016 or later, the question of whether the new requirements are already to be complied with will therefore depend on when they are published.


ESMA publishes updated Q&A catalog on the UCITS Directive

On November 21, 2016, the European Securities and Markets Authority (ESMA) added two items to its Q&A catalog on the UCITS Directive regarding the calculation of investment limits for target funds in umbrella constructions.

In it, ESMA clarifies that the 25% acquisition limit for units in one and the same UCITS or undertaking for collective investment in Article 56(2)(c) of the UCITS Directive refers to the individual sub-fund and not to the umbrella structure as a whole.

The same applies to the 10% or 20% limit in Article 55 (1) of the UCITS Directive, which refers to the value of the investment fund that may be invested in units of other UCITS or undertakings for collective investment.

Capital management companies that have so far interpreted these limits differently are requested by ESMA to adjust the fund portfolios as soon as possible.

The updated Q&A on the UCITS Directive can be found here.


Distribution as outsourcing? ESMA publishes updated Q&A catalog on the AIFM Directive

The European Securities and Markets Authority (ESMA) updated its Q&A catalog on the AIFM Directive on November 16, 2016, addressing the topics of outsourcing and distribution notification.


According to ESMA, it is a case of outsourcing if the manager of an alternative investment fund transfers functions listed in Annex 1 of the AIFM Directive to a third party. This includes, for example, distribution.

It remains to be seen to what extent BaFin will react to this. This is because, in accordance with the BaFin circular “Minimum Requirements for Risk Management for Investment Companies – Minimum Requirements for the Risk Management of Investment Companies”, which is currently still in force InvMaRisk” and the draft of the revised version (in future “Minimum Requirements for Risk Management for Capital Management Companies -. KAMaRisk“), BaFin does not qualify distribution as outsourcing, as this is a service that is typically obtained from a third party.

In addition, ESMA states that an externally managed fund is not itself a third party within the meaning of the Directive and thus outsourcing of the above-mentioned functions to it is impermissible.

Sales display

If a new unit class is launched, this does not constitute a material change in the view of ESMA. A notification of change is therefore not required.

If there is a material change in a cross-border distribution or management, all documents must be submitted to ESMA in addition to the change notification. AIFMs are also encouraged to highlight the changes in the documents.

The updated Q&A on the AIFM Directive can be found here.


ESMA publishes further Q&A catalogs on MiFID2

As recently as October, ESMA had published two Q&A catalogs on the MiFID2 topics of investor protection, marketing and sales of CFDs and other speculative products (see our November 2016 issue).

Now, in November, the European Supervisory Authority published two more Q&A catalogs that address the topics of market structures and transparency.

You can view the two new Q&A catalogs here.


PRIIPs – No postponement of information requirements for special funds with semi-professional investors

Contrary to the previous announcement, Section 307 para. 5 KAGB and the corresponding provision of § 31 para. 3a No. 2a WpHG to adapt German law to the PRIIPs Regulation will enter into force on December 31, 2016 after all.

Thus, as of this date, there is an obligation to provide information to semi-professional investors interested in acquiring a unit or share. This means that either key investor information pursuant to Section 166 KAGB or an information sheet in accordance with Regulation (EU) No. 1286/2014 (PRIIPs Regulation) must be provided to them prior to signing the contract.

In order to avoid liability risks, we advise that when selling special funds to semi-professional investors as of December 31, 2016, the requirements of the provision of § 307 para. 5 KAGB or of § 31 para. 3a No. 2a WpHG to be complied with. We will be happy to advise you on this.

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Henning Brockhaus


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