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AIMA
AIMA welcomes the close attention given to developing capital market instruments which drive more diversified investment in the European economy with the aim of delivering long-term sustainable growth. Capital markets are crucial in the financing of the economy and the hedge fund industry plays an ever increasing role in the entire chain of investing and financial intermediation, contributing to market depth, sophistication, transparency and thus its ability to support growth.
AIMA considers that policies aimed at growing long-term financing should pay due consideration to investors’ needs, strategies and asset classes employed for long-term investment, the possibility of regulatory initiatives inhibiting long-term financing and ways in which incentives can be given to investors to aid the long-term financing of the European economy.
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ALFI
ALFI takes the view that relying on accounting standards such as IFRS 9 does not seem to us as being the appropriate approach. Indeed, IFRS are accounting standards that pursue a different (i.e., accounting) purpose than the regulatory objectives pursued by the ELTIF Regulation and the present consultation. Also, the hedge accounting rules under IFRS 9 are not mandatory but are an optional accounting method. Derivatives may actually be used for hedging purposes without applying these hedging rules. We are concerned that Alternative Investment Fund managers, in particular ELTIF managers, may not be familiar with the sophisticated IFRS hedge accounting rules even when their companies are applying IFRS.
Another concern ALFI has is that IFRS standards are elaborated by an accounting organisation that is independent from the EU legislators. As a consequence, they may change over time, which, if the ELTIF Level II standards would refer to IFRS, would be beyond the EU legislator’s control.
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Invest Europe
While the final text of the Regulation did not contain as much flexibility for fund managers in certain areas as Invest Europe would have hoped, it believes that the final rules adopted in the Regulation still present a real opportunity to channel capital to the real economy through the new ELTIF framework. In this light, Invest Europe fully welcomes the content of the draft RTS produced by ESMA as they faithfully adhere to the spirit of the Level I text by logically extrapolating the conditions and rules under which ELTIFs can invest.
Invest Europe therefore endorsse the draft RTS on (i) hedging derivatives (ii) length of the life of the ELTIF (iii) criteria for the assessment of the market for potential buyers (iv) criteria for the valuation of the assets to be divested (v) common definitions, calculation methodologies and presentation formats of costs, and (vi) specifications on the facilities available to retail investors.
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ANASF
Since they aim at boosting long-term investments in the real economy, ELTIFs are an effective tool for conveying financial education and entrepreneurship. It is appropriate to mentionart. 30 of the ELTIF Regulation, which acknowledges the possibility to market an ELTIF to retail investors on the condition that retail investors are provided with appropriate investment advice. For an effective application of art. 30, financial advisors (including tied agents appointed by investment firms pursuant to art. 29 of Directive 2014/65/EU - MiFID II) should receive all relevant information from providers and distributors, particularly to perform the suitability test. All market operators shall be aware that retail investors’ access to ELTIFs is perfectly consistent with the MiFID framework – especially with regard to investor profiling and the assessment of risks – because ELTIFs have their own suitability test (art. 28, ELTIF Regulation).
Secondly, ANASF believes that the content of recital 7 of the proposed RTS should be emphasised. The disclosure of costs for retail ELTIFs should be harmonised between its prospectus and KID: the more information tools are standardised across investment products and documents, the more investors become acquainted with financial markets.
Finally, ANASF points out that an increasing number of potential investors are looking for financial advisors/tied agents with specific knowledge and competence pertaining to ESG (Environment, Social and Governance) investments. ELTIFs are particularly suitable for ESG investments, in light of their search for risk diversification and their focus on boosting long-term investments in the real economy.