Dear Readers,
BaFin launched consultations on the amendment of two KAGB ordinances at the end of July 2017: The Accounting and Valuation Ordinance (KARBV) and the Capital Investment Audit Report Ordinance (KAPrüfbV) need to be revised due to amended and new regulation, respectively. For example, the investment options for granting loans and investments in unsecuritized loan receivables included in the KAGB by the UCITS-V Implementation Act have made it necessary to amend the regulations.
On July 20, 2017, ESMA issued its final report on asset segregation requirements under the UCITS and AIFM Directives. ESMA had been working on this issue in detail since December 2014.
With warm regards
Henning Brockhaus
European supervision
ESMA opinion on the segregated safekeeping of assets
In an Opinion, the European Securities and Markets Authority (ESMA) proposes clarifications to the UCITS and AIFM Directive rules on segregated safekeeping of assets.
First of all, the requirements for the separate safekeeping of assets in the case of sub-custody are dealt with. The aim here is to further strengthen investor protection with regard to the safekeeping of assets in investment funds, particularly in the event of the insolvency of the depositary.
ESMA also addresses the issue of the applicability of the depositary regimes of the UCITS and AIFM Directives to CSDs. The goal is to have a consistent approach to this issue across the EU.
The Opinion represents ESMA’s final pronouncement on this topic. ESMA had started with a consultation(ESMA/14/1326) on December 1, 2014.
You can access ESMA’s opinion here.
National supervision
BaFin consults on new KARBV and KAPrüfbV
On July 25, 2017, the German Federal Financial Supervisory Authority (BaFin) published draft amendments to the
- the Ordinance on the Content, Scope and Presentation of the Accounts of Investment Funds, Investment Stock Corporations and Investment Limited Partnerships and on the Valuation of the Assets Belonging to the Investment Fund (Kapitalanlage-Rechnungslegungs- und -Bewertungsverordnung, KARBV), and
- the Ordinance on the Subject Matter of the Audit and the Contents of the Audit Reports for External Capital Management Companies, Investment Stock Corporations, Investment Limited Partnerships and Special Assets (Capital Investment Audit Report Ordinance, KAPrüfbV)
put up for consultation.
The background to the amendment is first of all the Act Implementing the UCITS-V Directive, which introduced new regulations for the granting of loans and investments in unsecuritized loan receivables for the account of certain investment funds. In addition, BaFin has made adjustments due to the EU regulation on increasing the transparency of securities financing transactions and due to the EU benchmark regulation.
The consultation ends on August 15, 2017. More information and the draft regulations can be found here.
European supervision
ESMA expands Q&A catalogs on the UCITS and AIFM Directives
On July 11, 2017, ESMA made updates to the Q&A catalogs on the application of the UCITS and AIFM Directives.
ESMA is expanding the Q&A catalog on the UCITS Directive to include information on issuer-related investment limits of UCITS. In addition, ESMA answers questions on the waiting period when changing persons between depositary and management company with regard to the required independence of the management bodies as well as the depositary’s supervisory functions.
The Q&A catalog on the AIFM Directive is supplemented with guidance on reporting regarding the currency of assets under management and NAV as well as on the risk associated with purchases of loans on the secondary market.
European legislation
Money Market Fund Regulation published in the EU Official Journal
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 is applicable as of July 21, 2018.
According to Art. 1 para. 1 MMFR, the MMF Regulation applies to UCITS or AIFs that invest in short-term assets and have single or cumulative objectives aimed at yields in line with money market rates or the stability of value of the investment.
You can access the regulation here.
