Fund Management (2024)

ESMA’s role in the area of fund management has included issuing technical advice to the European Commission, developing guidelines, preparing regulatory and implementing technical standards, and issuing opinions, Q&As and ad-hoc reports.

Although the bulk of ESMA’s work in the fund management area relates to UCITS and AIFMD, ESMA also carries out work in relation to European Venture Capital Funds (EuVECA), European Social Entrepreneurship Funds (EuSEF), European Long-term Investment Funds (ELTIF) and Money Market Funds (MMFs).

The UCITS Directive is a detailed, harmonised framework for investment funds that can be sold to retail investors throughout the EU. This means that funds authorised in one Member State can be marketed in another Member State using a passporting mechanism. Originally introduced in 1985, the UCITS rules have been revised several times, most recently via the UCITS V Directive which came into force on 18 March 2016. UCITS V aims to bring the UCITS regime into line with the AIFM Directive on remuneration and depositary rules and introduce a range of corresponding measures: it clarifies the depositary role, introduces rules on remuneration policies to be applied to key members of the UCITS management company’s staff and harmonises minimum administrative sanctions for infringements to the UCITS rules.

UCITSare a very successful product: there are more than 30,000UCITS funds in the EU which represent over €9 trillion of assets under management.

▸ To report about an infringement of national provisions transposing the UCITS Directive, please consult theWhistleblowerssection.

UCITS sanctions reports

• 2022 UCITS sanctions report
• 2021 UCITS sanctions report
• 2020 UCITS sanctions report
• 2019 UCITS sanctions report
• 2018 UCITS sanctions report
• 2016/2017 UCITS sanctions report

The AIFMD applies to managers of funds that are not UCITS, including hedge funds, private equity funds, and real estate funds. Alternative investment funds can be sold to professional investors throughout the EU on the basis of a passport. The AIFMD is notable for the detailed regulatory reporting regime that it introduced, which requires managers to submit an extensive set of information to their national authorities on aspects such as their investment portfolios, leverage and collateral. Another important element of the AIFMD – and of ESMA’s work on the Directive – relates to third countries, and more specifically the possibility for the EU passport to be extended to non-EU funds and managers. Should such a passport be introduced, ESMA will have an important role to play in the smooth functioning of this new mechanism.

An important part of the AIFMD is the AIFMD reporting.

Fund Management reporting

The Alternative Investment Fund Managers Directive (AIFMD) includes the rules governingfunds that are not UCITS, including hedge funds, private equity funds, and real estate funds.The Money Market Fund Regulation (MMFR) sets out theregulatory framework aimed at ensuring the stability and integrity of money market funds. Under each of the frameworks a number of data reporting obligations have been established.

Alternative investment fund managers reporting instructions and XML schema

The AIFMD requires detailed reporting to the competent authorities, including information in relation to principal markets on which an AIFM trades, instruments traded, principal exposures, important concentrations, illiquid assets, special arrangements, risk profiles, risk management systems, stress testing results, a list of all AIFs managed, leverage in the AIFs and sources of leverage.

ESMA published its final guidelines on the reporting obligations for Alternative Investment Fund Managers (AIFMs) on 8 August 2014 to provide clarifications on the information that AIFMs must report to national competent authorities (NCAs) who will subsequently transmit it to ESMA to ensure effective supervision within the Union.ESMA has also issued a Q&A document on the Application of the AIFMD which provides further detail on the AIFMD requirements including the reporting and disclosure provisions. This documentis updated as new questions arise.

ESMA also developed IT guidance that complement the information included in the Guidelines so that managers of AIFs have all the necessary information to fill in the reporting template they will send to their competent authority, as specified under articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD. Each AIFM should contact directly the NCAs to know how the filling of the AIFMD reports will be handled at national level.

ESMA’s reporting instructions aim to specify the exchange of AIFMD reports between the managers of AIFMs, NCAs, and ESMA.

• Guidelines on reporting obligations under Articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD
• Questions and Answers (Q&As)
• Technical guidanceand Schemas(updated on 16 October 2023)

In case of any question, please contactESMA Support.

AIFMD sanctions reports

• 2022AIFMD sanctions report
• 2021 AIFMD sanctions report
• 2020 AIFMD sanctions report
• 2018-2019 AIFMD sanctions report

The requirements of Article 37 of the MMFR regulation and related technical standards oblige the managers of MMF to submit a detailed list of information to national competent authorities (NCAs) who will then transmit the information to ESMA. The information will be included in a central database, with the objective of ensuring ensure effective supervision within the Union.

ESMA developed the Guidelines and IT guidance that complement the information included in the technical standards so that managers of MMFs have all the necessary information to fill in the reporting template they will send to the competent authority of their MMF, as specified in article 37 of the MMF Regulation. Each manager of MMF should contact directly the NCAs to know how the filling of the MMF reports will be handled at national level.

ESMA has revised the IT technical guidance.The new IT technical guidance revision 4 introduces new validation rules to improve data quality or lighter rules to facilitate data reporting. The new changes are specified in the tab ‘Technical guidance changes’ of the excel document. The IT technical guidance revision 4 will be applicable from January 2024 onwards. Reporting entities should use the version revision 4 to submit reports required under Articles 37 of the MMF Regulation by January 2024.

The IT technical guidance revision 4 replaces the IT technical guidance revision 3 published in November 2020.

ESMA’s reporting instructions aim to specify the exchange of MMF reports between the managers of MMFs, NCAs, and ESMA.

• Final report on reporting under MMFR
• Reporting Instructions
• Validations
• Schemas

These documents replace the ones published for the first time in July 2019 as a footnote in the executive summary of the final report on MMF Guidelines on reporting. This footnote has been updated and now refers to the same set of amended documents.

In case of any question, please contactESMA Support.

The UCITS Directive and the AIFMD grant the cross-border passport across the Union for the marketing of UCITS and AIFs. In the context of the development of a Capital Markets Union, aDirectiveand aRegulationon the cross-border distribution of funds were adopted with a view to facilitating the marketing of UCITS and AIFs throughout the Union. The cross-border distribution legislative package empowers ESMA to develop several technical standards, guidelines, reports and to publish information on its website to ensure the transparency of the rules governing the marketing requirements and regulatory fees and charges applicable in each Member State, as well as to help investors know the offer of investment funds available for marketing in their Member State.

Implementing technical standards

In order to ensure that the information published by competent authorities on their websites as regards to the national laws, regulations and administrative provisions governing marketing requirements and the regulatory fees and charges levied in relation to the cross-border activities of fund managers is made on a consistent manner, ESMA developed implementing technical standards to specify, inter alia, the format of these publications.

The implementing technical standards were approved by the European Commission and thereafter published as theCommission Implementing Regulation (EU) 2021/955.

ESMA report on national rules governing marketing requirements

ESMA is required to develop a bi-annual report, which provides an overview of these national rules and contains an analysis of the effect of those national rules governing marketing communications. This report is based on information provided by competent authorities to ESMA and is submitted to the European Parliament, the Council and the Commission.

Thefirst iteration of this reportwas published on 1 July 2021.

Guidelines on marketing communications

The Regulation requires ESMA to issue guidelines to specify the application of the requirements for all marketing communications addressed to investors, which must be identifiable as such, describe the risks and rewards of purchasing units or shares of AIFs and UCITS in an equally prominent manner and contain information which is clear, fair and not misleading. The purpose of these guidelines is to set common standards for all marketing communications relating to investment funds to foster investor protection while setting a level playing field for high quality marketing communications. The ESMA guidelines take into account the online aspects of marketing communications, which are used more and more frequently to promote investment in UCITS and AIFs, notably on social media.

Theseguidelineswere issued on 2 August 2021 and will be updated periodically.

Transparency of marketing requirements and regulatory fees and charges

National competent authorities must publish on their websites up-to-date and complete information on the national laws, regulations and administrative provisions governing marketing requirements in their jurisdiction, as well as a summary of these requirements. In addition, they must also publish the list of regulatory fees and charges they levy in relation to the cross-border activities of fund managers. In order to facilitate access to this information by stakeholders, ESMA publishes on its websitethe list of hyperlinksto the websites of competent authorities where the complete and up to date information is published, along with the full text of the summaries, and the list of hyperlinks to the webpages of competent authorities where the list of regulatory fees and charges is published.