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08 December 2017

ALFI: Review of the European Supervisory Authorities – ALFI takes position


ALFI published its feedback on the Proposal of the Commission COM (2017) 536 for a regulation on the role and powers of the European Supervisory Authorities. The period for feedback extends until 23 January 2018. There are several contributions of other stakeholders from the banking and the asset management industry.

ALFI is of the view that any change to the current regulatory framework of the European asset management industry should focus on the needs and best interests of investors in order to provide safe, high quality investment products and access to best-in-class professional investment management expertise and related services coupled with strict oversight.

ALFI regrets that, in its Consultation on the Operations of the ESAs in spring 2017, the Commission did not include any questions dealing with “delegation, outsourcing and risk transfer” although this is now considered in the Proposal.

ALFI questions the inclusion of what are effectively new rules on delegation in what is otherwise a result of a consultation on the general powers of the ESAs.

ALFI is further of the view that the Proposal is in breach of the principle of subsidiarity which is enshrined in the European legal framework. NCAs are best placed to know and understand their respective market offerings. Their close oversight of market participants and products guarantees the best and most efficient level of investor and market protection.

The Proposal includes the direct supervision of EuVECAs, EuSEFs and ELTIFs. ALFI does not embrace direct supervision by ESMA, in line with a majority of stakeholders responding to the Commission consultation. The Impact Assessment does not provide any conclusive evidence of the need for ESMA to become the lead regulator for these three investment products, responsible for both approval and supervision.

The UCITS and AIFM Directives explicitly provide for the possibility for investment funds and management companies to delegate certain functions. They require cooperation agreements between EU Member States and third countries in case of delegation. The designation of delegates in and outside the EU today is subject to strict requirements in terms of initial and ongoing due diligence and monitoring of the activities of delegates. Financial institutions making use of delegation arrangements retain decision powers and must continuously monitor these delegation arrangements. The existing framework with the required protections and safeguards is already in place. There is therefore no need, nor is there any justification, to go beyond this.

Full feedback



© ALFI - Association of the Luxembourg Fund Industry


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