EUROPE AIFMD - ESMA consultation paper on asset segregation under the AIFMD Background The Alternative Investment Fund Managers Di- rective (“AIFMD”) entered into force on 22 July 2013, establishing, inter alia, a harmonised set of rules regulating the provision of depositary bank services to alternative investment funds (“AIFs”). On the basis of ESMA’s technical advice, the European Commission adopted Commission Delegated Regulation (EU) No 231/2013, supple- menting the AIFMD as regards, amongst others, depositaries of AIFs. The depositary provisions - in particular those on the segregation of assets - are a key aspect of the AIFMD framework, aiming at enhancing in- vestors protection.

What’s in there? Seeing merit in further fostering convergence in the application of the AIFMD asset segregation requirements, ESMA decided to consult external stakeholders on a proposal for guidelines. On 1 December 2014, ESMA published a con- sultation paper containing ESMA's proposals for possible guidelines on the AIFMD asset segre- gation requirements, where safekeeping duties have been delegated by the appointed depositary of an AIF to third parties. The guidelines will address the question of whether (or not) there should be separate ac- counts for the AIF assets of each depositary when a delegate holds assets for multiple de- positary clients. There are two alternative options on which ESMA is seeking feedback from the respondents to the con- sultation in question: 1) Option 1: The omnibus account on which AIF as- sets are to be kept by the third-party delegate may only comprise assets of the AIF and assets of other AIFs of the same delegating depositary. Non-AIF as- sets should not be included in the account on which the AIF assets are kept at the level of the delegated third party (and its own delegates). 2) Option 2: Separation of AIF and non-AIF assets is required, but the account on which the AIF assets are kept may include assets from AIFs of different depositaries. What’s next? The consultation runs until 30 January 2015. Stakeholder contributions received will be pub- lished following the close of the consultation. ESMA aims at publishing its final guidelines in the second quarter of 2015. The guidelines will enter into force 2 months after their publication by ESMA. THE CONSULTATION PAPER IS AVAILABLE HERE.

CSDR - ESMA launches

3 consultations on CSDR implementing measures Background Regulation (EU) No 909/2014 of the European Par- liament and of the Council of 23 July 2014 on im- proving securities settlement in the European Union and on central securities depositories (the “CSDR”, available here) was published in the Official Journal of the EU on 28 August 2014 and entered into force on 17 September 2014. The aim of the CSDR is to harmonise certain as- pects of the settlement cycle and settlement disci- pline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. On 23 June 2014, ESMA received provisional man- dates from the European Commission for technical advice on possible delegated acts concerning CSDs. These mandates were confirmed on 2 October 2014 (the relevant European Commission letter is available here). What’s in there? On 18 December 2014, ESMA launched 3 consul- tations on proposed technical standards, technical advice and guidelines implementing the CSDR. I.Draft technical standards on settlement dis- cipline, CSD requirements and internalised settlement In its first Consultation Paper, ESMA is consulting on draft technical standards on proposed rules covering settlement discipline measures, the au- thorisation, recognition and supervision of CSDs, or- ganisational and prudential requirements for CSDs, access requirements (between a CSD and its par- ticipants, by issuers to CSDs, between CSDs, and

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