Parliament’s negotiators agreed with the Council on new rules to facilitate the flow of funds towards the real economy, including green and digital priority areas.
The provisional deal on European long-term investment funds
(ELTIFs) struck on Wednesday aims to create appropriate regulatory
oversight and investor protection safeguards and to accelerate the
uptake of ELTIFs, also by retail investors. This should boost the
financing of long-term projects such as infrastructure projects, real
estate or SMEs throughout the EU.
Protecting investors and more flexibility
All ELTIFs marketed in the EU have to be authorised and MIFID
compliant. A test to establish whether an investment product is
suitable for retail investors and clear warnings referring to it being
sometimes illiquid long-term investment or to value fluctuations will be
necessary. A retail investor will have to explicitly consent when
investing in a product assessed as not suitable. Finally, MEPs
highlighted the need to promote independent financial literacy as key to
making ELTIFs more accessible and popular among individual investors.
To foster a more vibrant market,
negotiators agreed to the Parliament’s proposal and deleted the minimum
threshold for individual real assets set out in the ELTIF regulation to
get rid of administrative burdens and the associated costs; they also
extended the possibility for ELTIFs to invest in listed companies.
Finally, recognising FinTechs’ important role in promoting digital
innovation and the overall efficiency of European Union financial
markets, MEPs ensured that ELTIFs could invest in such companies within
five years of their authorisation.
Sustainable projects
As hundreds of billions of euro in
additional investments will be needed to cover the long-term financing
gap in the European Union and to reach the 2030 energy and climate
targets, MEPs ensured that the regulation refers to the European Green
Deal (alongside the “digital agenda for Europe”) as one of the
priorities into which long-term investments should be channelled.
Moreover, ELTIFs will be able to invest in European green bonds issued
under the EU Green Bond Standards, if they meet the requirements of the
ELTIF framework on issuance characteristics and long-term focus.
Finally, negotiators agreed that the new rules should apply nine months after their publication in the EU Official journal.
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