Guest contribution Regulation
Rules for technology transition on radar 2024 continues to show see a flurry of regulatory activity in Europe.
Investor confidence and democratising access Initiatives such as Eltifs and the RIS, coupled with rigorous reviews of costs and charges, liquidity rules and asset valuation rules signal a commitment that performance, transparency and fair prices are basic elements for a winning game. Restoring that confidence also hinges on providing investors with access to 44
SPRING 2024
robust returns while managing risks effectively. This would redirect funds currently remaining in savings accounts into the real economy. On the costs and charges side, while fair pricing remains paramount for investor protection, regulatory interventions must strike a delicate balance to foster competition in the asset management industry and support financial innovation, steering clear of indirect price regulation.
MICHÈLE EISENHU TH Partner Arendt & Medernach
OLIVIA MOESSNER Partner Elvinger Hoss Prussen
Ensuring liquidity for investment funds remains a cornerstone of financial markets protection. Ucits VI and AIFMD II, which are being finalised, will amongst others bring more flexibilities for European funds in using liquidity management tools. On the other side, efforts to revive investor interest should not be hindered by the review of Ucits eligible assets rules, another initiative led at EU level and closely monitored by the asset management industry. Restricting the scope of Ucits eligible assets risks undermining the competitiveness of Ucits products vis-àvis other financial instruments, curtailing the flexibility of active managers and limiting the financial offer and return which retail investors can expect. Conversely, expanding the spectrum of permissible exposures for Ucits, while adequately mitigating risks, could invigorate the sector, enhancing its appeal and diversifying investment opportunities, in line with how Eltif 2.0 has allowed retail investors to gain access to alternative asset classes. We trust that European institutions will keep supporting the Ucits brand that has been alive and safe for the past 35 years in Europe and beyond! Meanwhile, in Luxembourg, the available “funds toolbox” has been modernised by introducing improvements and adjustments such as new structuring options and flexibilities for Part II funds as well as a wider access to Raifs by well-informed investors other than professional investors. Michèle Eisenhuth and Olivia Moessner speak on the “2024 regulatory update” panel at the Alfi Global Asset Management Conference, Tuesday 19 March at 11:30am.
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European institutions continue reshaping the digital landscape with the adoption of the Artificial Intelligence Act and the implementation of regulations such as Dora and Mica. The technological transition is on its way in Europe. Tokenisation of financial instruments is emerging as a major trend in the asset management industry and is likely to reshape the products, their distribution, their operations and their managers. On the sustainable finance side, the SFDR and Taxonomy Regulation remain at the forefront with ongoing clarifications and with the adoption of new delegated regulations relating to the criteria for meeting the environmental objectives under the Taxonomy Regulation, alongside the review of the SFDR regulatory technical standards and forthcoming Esma guidelines on funds’ names using ESG or sustainability-related terms. Those developments underscore Europe’s leadership in sustainable finance, where ESG considerations have become a fundamental element of the financial sector to protect the environmental capital for the next generations and boost the green finance leading to creation of more and more article 9 funds.
Elvinger Hoss Prussen, Matic Zorman/Maison Moderne
Words MICHÈLE EISENHUTH AND OLIVIA MOESSNER