29 November 2011

Speech by ESMA chair Steven Maijoor given at the EFAMA Investment Management Forum

The task of ensuring investor protection is clearly outlined. The new powers under Article 9 of the regulations establishing the ESAs entrust us with the task of promoting transparency, simplicity and fairness in the market for consumer financial products across Europe. ESMA has been provided with several tools in that connection: these include the collection and analysis of data on consumer trends (for the purposes of which we will collect data on complaints), the monitoring of new and existing financial activities, and the possibility to adopt guidelines and recommendations for ensuring the harmonisation of regulatory practices. ESMA has also been entrusted with some more ‘intrusive’ powers, such as the possibility to issue warnings whenever a given financial activity poses a serious threat to ESMA’s objectives (one of which is investor protection) and, in certain specific situations, the power to prohibit temporarily or restrict certain financial activities.

ESMA has also recently set up a new Financial Innovation Standing Committee (FISC). FISC will assist ESMA in fulfilling its tasks and responsibilities relating to investor protection. Its main aim is to achieve a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities; and it will do this by facilitating the efficient coordination of policy-making work in the area of financial innovation within ESMA. A clear link between ESMA and its stakeholders was established with the setting up last May of the Securities and Markets Stakeholders Group (SMSG). The SMSG is a new consultative body created by the regulation establishing ESMA and takes the place of the Market Participants Consultative Panel that existed under CESR.

The AIFMD framework introduces an entirely new regulatory landscape for managers of alternative investments. It is worth highlighting that ESMA introduced very important clarifications on some of the core elements of the AIFMD which are linked to investor protection such as the transparency requirements, the duties of the depositary and its liability regime, and the rules applying to the delegation to third country managers and depositaries. It is now up to the Commission’s services to analyse the proposals that were made in order to assist them in developing the AIFMD Level 2 measures. But ESMA’s work on the AIFMD does not stop here. Indeed, we have already determined certain areas on which it is our intention to complement our advice through the development of further guidelines (for instance, on the advanced method of calculation of leverage) and are willing to lead the negotiation of the cooperation agreements with the non-EU competent authorities which are foreseen by the AIFMD provisions on third countries.

Another important workstream on which we are currently focusing our efforts is the future guidelines on ETFs and structured UCITS, which will also ensure a better regulatory framework for investors. Our intention is to introduce certain rules which are specific to ETFs, such as a requirement for such funds to use an identifier, as well as new provisions ensuring an adequate level of protection of retail investors dealing on the secondary market. For issues arising from securities lending activities for instance, the approach that we intend to follow is to cover all kinds of UCITS – ETFs and non-ETFs – engaging in such activity. In particular, we aim at delivering more transparency vis-à-vis investors by requiring funds to disclose in their prospectuses the fact that they make use of securities lending, and setting out some specific rules on the disclosure of collateral and its quality.

The investment management industry is facing a large number of new obligations. While there might be concerns about the short-term impact of all these new obligations on your sector, I am convinced that these new obligations will help to restore confidence of investors and the wider public in the investment management industry. It goes without saying that this confidence is required for the long-term viability of the investment management industry.

Full speech

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