European Commission Publishes the Market Integration and Supervision Package

The European Commission published the much-anticipated Market Integration and Supervision Package – the scope of the legislative review is substantial, with proposed amendments to the legislative frameworks regulating asset management, trading, post-trading, innovation, and the supervisory structure.

Critically for investors and Irish Funds members, the package re-opens several Level 1 Directives, including AIFMD and UCITS Directive in an attempt to address continued EU capital market fragmentation, remove barriers to investment, and drive supervisory convergence.

Irish Funds welcomes the intention to enhance Europe’s capital markets by eliminating impediments to cross-border distribution, which we see as both a practical and urgent issue to address.

Where things are working well, we should not be seeking to implement change that could negatively impact investing activity. With that in mind, Irish Funds will continue to champion the protection and utility of the UCITS product which has served investors well and is one of the EU’s most successful global brands.

Some of the most relevant provisions for Irish Funds Members include:

(1) A new definition of “EU Group” that would see intra-EU group allocation of resources no longer treated as delegation.

(2) Bigger role for ESMA in the supervision of large asset managers, and a coordination role for ESMA where disagreements arise between home and host NCAs.

(3) A proposed EU Depositary Passport that would allow AIFMs and UCITS to appoint a depositary located anywhere in the EU and allow depositaries to offer cross-border services.

(4) Harmonisation of authorisation and marketing rules to speed up time and access to market.

We agree with the Commission’s stated policy objectives around simplification, agility, and growing the number of EU citizens who invest. Where these are achieved by the proposals, we will be supportive. For others, which do little to create or encourage the capital markets to grow, embed duplication and additional cost or limit investors access to expertise, we would urge policy makers to take a considered approach, giving the necessary time to analyse and debate these significant proposals.

In collaboration with our members and Working Groups, Irish Funds will continue to play a leading role in advocating to EU and Member State officials the view from across the industry and investors to ensure that we achieve a Savings and Investments Union that is appropriately calibrated and remains focused on the real challenges to unlocking the true potential of European capital markets.