Capital markets union: provisional agreement reached on alternative investment fund managers directi
Negotiators from the Council and the European Parliament reached a provisional agreement on new rules to improve European capital markets and strengthen investor protection in the EU.
The provisional agreement reviews the alternative investment fund managers directive, which governs managers of hedge funds, private equity funds, private debt funds, real estate funds and other alternative investment funds in the Union. It also modernises the rules in the framework for undertakings for collective investment in transferable securities (UCITS), i.e. plain-vanilla EU-harmonised retail investment funds such as unit trusts and investment companies.
Negotiators agreed to enhance the integration of asset management markets in Europe and to modernise the framework for key regulatory aspects.
Under the provisional agreement, negotiators decided to enhance the availability of liquidity management tools, with new requirements for managers to provide for the activation of these instruments. This will help ensure that fund managers are well equipped to deal with significant outflows in times of financial turbulence.
The Parliament and the Council also reached a provisional agreement on an EU framework for funds originating loans, i.e. funds that provide credit to companies, supplemented with several requirements to alleviate risks to financial stability and to ensure an appropriate level of investor protection.
Negotiators also agreed on enhanced rules for delegation by investment managers to third parties: this will enable them to better tap the best resources from market specialists, subject to reinforced supervision and preserving market integrity.
Other key components of the agreement include enhanced data sharing and cooperation between authorities, and new measures to identify undue costs that could be charged to funds, and hence their investors, as well as on preventing possible misleading names to better protect investors.
Next steps
The agreement reached today is provisional as it still needs to be confirmed by the Council and the Parliament before it can be formally adopted.
Background
The alternative investment fund managers directive and plain-vanilla EU investment funds (UCITS, or undertakings for collective investment in transferable securities) are part of the capital markets union package which the Commission presented on 25 November 2021. The capital markets union is the EU’s initiative to create a truly single market for capital across the EU. It aims to get investment and savings flowing across all member states for the benefit of citizens, businesses, and investors.
The Council agreed its position (general approach) on the proposal on 17 June 2022. Negotiations with the European Parliament started on 8 March 2023 and ended in the provisional agreement reached today.