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Regulatory Update: ESMA Consultation Paper on Guidelines on Sound Remuneration Policies

23 July 2015

ESMA have today published a consultation paper on guidelines on sound remuneration policies under the UCITS Directive and AIFMD.

It appears that in line with the UCITS V Level 1 text (recital 9 in particular), ESMA has decided to take the AIFMD remuneration guidelines as a starting point for developing the UCITS V remuneration guidelines. Annex 1 of the CP provides a useful comparison between the draft UCITS guidelines and the already existing AIFMD guidelines.

In this consultation paper ESMA proposes an approach on proportionality which is in line with the AIFMD remuneration guidelines and allows for disapplication of certain requirements on an exceptional basis in taking into account specific facts. Notwithstanding this, ESMA recognises that another reading of the proportionality provisions under UCITS V could also be envisaged and is, therefore, interested in hearing stakeholders’ views on the impact (in particular in terms of costs and administrative burden) of the approach to proportionality presented by EBA in its recent consultation paper on remuneration principles under CRD IV.

The consultation paper also proposes a revision of the AIFMD remuneration guidelines by clarifying that, in a group context, non AIFM sectoral prudential supervisors of group entities may deem certain staff of an AIFM in that group to be identified staff for the purposes of their sectoral remuneration guidelines.

The deadline to respond to the consultation is Friday, 23 October 2015. Irish Funds will be preparing a response to this consultation paper and we would ask that you send us any comments you would like reflected in an industry response by Friday, 16 October. Alternatively, interested parties can respond directly to ESMA via the ESMA website under the heading ‘Your input/Consultations’.

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