Recommendations for the European Commission’s Capital Markets Union
Irish Funds recently responded to the European Commission’s ‘call for evidence’ for the EU regulatory framework for financial services, as part of the Action Plan for Capital Markets Union (CMU).
We highlighted key concerns relating to the EU policy and legislative process which have subjected industry to unrealistically tight deadlines, coupled with delays in the detailed implementing measures and the issuing of accompanying guidance. Irish Funds has called for a period of regulatory stability following the comprehensive changes made to the regulatory framework in recent years and stressed that future changes to EU financial services legislation should only be made in line with an overall cohesive approach to policy making.
In order to address issues being encountered and facilitate CMU, Irish Funds has called for a range of measures, including:
- An integrated regulatory reporting strategy and a single coherent, streamlined reporting framework with reporting via a single EU portal to create efficiencies and enable better access to, and monitoring of, data by regulators and policy makers
- Enhancements to the cross-border marketing process, including the creation of a single EU passport notification portal, the imposition of a maximum fee range regulators can levy and the development of a common definition of marketing under AIFMD
- Clarification on the entitlement of EU resident investment funds to tax treaty benefits, particularly in the context of the OECD’s Base Erosion and Profit Sharing (BEPS) project
- Recognition of the important role of money market funds in CMU and the need for a proportionate solution for constant NAV (“CNAV”) money market funds under the proposed Money Market Fund Regulation
- A common European framework for loan origination funds and the removal of barriers to non-bank lending in order to achieve the goal of increasing non-bank finance via the capital markets
- Clarification of the rules regarding depositary location in the context of the third country passport in order to enhance protection for European investors
- The introduction of a new EU category of “semi-professional investor” within AIFMD or ultimately under the MiFID framework in order to appropriately broaden the investment horizon for such investors and in order to further diversify the supply of funding to long-term financing using vehicles, such as the European Long-term Investment Funds (ELTIFs)
- Appropriately clarify the asset segregation rules under AIFMD in recognition of the globalised environment in which EU cross-border funds operate as well as the treatment by depositaries of intermediary Central Security Depositories (CSDs) in relation to the services they provide
- Address overlaps, duplications and inconsistencies in the rules relating to financial services remuneration across the various legislative frameworks
Patrick Rooney, Senior Regulatory Affairs Manager, Irish Funds