The European Commission expects to provide more clarity on the proposed supervisory standards for Eltifs, Europe’s new long-term investment funds, in the coming weeks, an EU official said on Tuesday.
In response to questions by Investment Officer, the official confirmed the Commission is currently considering the draft regulatory and technical standards under the updated regime for Eltif funds. The standards, known as ‘RTS’, were proposed a month ago by the European Securities and Markets Authority, Esma.
“We are currently assessing the content of the draft RTSs submitted by Esma in December, in line with the procedure of the ESAs Regulations,” the official said, referring to the procedures for working with the European Supervisory Agencies, known as ESAs, of which Esma is one. “We are not in a position to announce what the outcome of this assessment will bring. We should be able to communicate more details in the next weeks.”
Investment fund specialists across Europe, especially in Luxembourg, are awaiting the final adoption of the standards before they can start launching funds under the updated EU regime for Eltifs. A significant update to the EU legal regime for Eltifs was introduced on 10 January. The effective application of Eltif 2.0 still hinges on the final adoption of supervisory standards.
’Correct’ standards needed
Efama, the trade association representing Europe’s fund and asset management sector last week urged the Commission to ensure that the “correct” technical standards are introduced. These standards are regards as vital for the success of the new Eltif 2.0 regime.
Industry representatives are understood to be actively trying to persuade the Commission to introduce a higher level of flexibility beyond what Esma has actually proposed. They regard the proposed mandatory redemption notice period of 12 months as a likely obstacle to broad adoption among retail and HNWI investors.
The new Eltif regime can potentially open doors to retail investors looking to allocate part of their portfolios into alternative investments. Several major asset managers, including Blackrock, Schroders and JP Morgan Asset Management, plan to offer Eltif funds under the rules of the new regime.
Further reading on Investment Officer Luxembourg:
- Eltif 2.0: Industry urges EC to adopt ‘correct’ standards
- CSSF ready to conditionally approve Eltif 2.0 applications
- Eltif 2.0 launch: Tension builds in Luxembourg