Fund Management

The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers  on the application Alternative Investment Fund Managers Directive (AIFMD).

ESMA has added a new Q&A clarifying the application of the AIFMD notification requirements with regard to AIFMs managing umbrella AIFs on a cross-border basis.

The purpose of this Q&A document is to promote common supervisory approaches and practices in the application of the AIFMD and its implementing measures.

Today, the European Supervisory Authorities (ESAs) wrote a letter to the European Commission expressing their concerns regarding the possibility of duplicating information requirements for investment funds from 1 January 2020 and the importance of legislative changes to avoid such a situation. 

Additionally, to support such changes, as well as to address key issues that have arisen from the practical application of the Key Information Document (KID) for Packaged Retail and Insurance-based Investment Products (PRIIPs), the ESAs intend to propose targeted amendments to the PRIIPs Delegated Regulation.

Taking into account the time needed for the co-legislators to scrutinise any amendments to the Delegated Regulation, the ESAs intend to submit proposals to the European Commission in the first quarter of 2019. As part of this process, the ESAs intend to launch a short public consultation during the fourth quarter of this year. 


The ESAs’ letter responds to two letters received from the European Commission in July  and August stating a deferral of the review of the PRIIPs Regulation and requesting guidance from the ESAs regarding the information to be disclosed for investment funds.

The KID for PRIIPs is a mandatory, three-page A4 information document to be provided to consumers before purchasing a PRIIP. PRIIPs include for example funds, structured products, unit-linked and with-profits life insurance contracts, and structured deposits.

The PRIIPs Regulation defines the main rules and principles for KIDs. It is supplemented by a Delegated Regulation specifying the presentation and contents of the KID, which is based on Regulatory Technical Standards that the ESAs were mandated to develop.

The European Securities and Markets Authority (ESMA) has today opened a public consultation on how European money market funds (MMFs) should conduct their internal stress testing. While MMFs invest in highly liquid and low risk short-term debt instruments, they play an important role in the financial system and are interconnected with other key market participants.

The Money Market Funds Regulation (MMFR) requires managers of MMFs to conduct regular stress tests as part of their risk management and regulatory disclosure. Funds must put in place sound stress testing processes, including identifing stress events, or future changes in economic conditions, and assess the impacts these different scenarios may have on (the net-asset-value and/or liquidity of) the MMF.

ESMA, to capture coherently MMFs’ risks, has developed draft guidelines for their stress testing. The consultation paper is the first step in developing detailed specifications for these stress tests by proposing common parameters and scenarios which take into account the following hyphothetical risk factors:

  •  liquidity changes of the assets held in the portfolio of the MMF;
  • credit risk, including credit events and rating events;
  • changes in interest and exchange rates;
  • redemptions;
  • spread changes of indexes to which interest rates of portfolio securities are tied; and
  • macro-economic shocks.

ESMA guidelines to be updated annually

In March 2018, ESMA published its 2017 Guidelines on stress tests for MMFs, which will be updated following the consultation so that managers of MMFs have the information needed to fill-in the required fields in the reporting template. The guidelines need to be updated at least every year taking into account the latest market developments.


Stakeholders’ views are especially sought on the draft methodology, risks factors, data and the impact calculation. The consultation is open for comments from interested parties until 1 December 2018. ESMA will use the feedback received to finalise its Guidelines in Q1 2019.

Consultation on draft guidelines on stress test scenarios under the MMF Regulation  

Responding to this paper

ESMA invites responses to the questions set out throughout its Consultation Paper on the Draft guidelines on stress test scenarios under the MMF Regulation. Responses are most helpful if they:

  • respond to the question stated;
  • indicate the specific question to which the comment relates;
  • contain a clear rationale; and
  • describe any alternatives ESMA should consider.

ESMA will consider all comments received by 1 December 2018.

The European Securities and Markets Authority (ESMA) has sent a letter to the European Insurance and Occupational Pensions Authority (EIOPA) in response to certain AIFMD-related questions raised by EIOPA relating to the AIF definition and leverage.

ESMA responds to the questions raised by EIOPA under section 11.5.2. of its second set of advice to the European Commission on specific items in the Solvency II Delegated Regulation (EIOPA-BoS-18/075). In this context, EIOPA addressed several questions to ESMA with respect to the AIF definition and leverage calculation pursuant to the Alternative Investment Fund Managers Directive (AIFMD) and its implementing measures.