Laws and Regulations

Proposed amendments to EU rules for alternative investment funds have passed through technical discussions in Brussels without much damage. The outcome of these ‘level 1’ talks means that the AIFMD and Ucits review now is back on course to be completed shortly. The EU’s presidency is expected to issue a statement next week.

European authorities are speeding up negotiations on the final text of the so-called Corporate Sustainability Due Diligence Directive (CSDDD, also known as the CS3D). Before the end of this year, the European Commission, the European Parliament and the European Council want to reach an agreement on it.

Representatives of the European asset management industry believe that lawmakers in Brussels need to step up their efforts to make sure that new voting rules for SMEs and scale-up companies strike a balance between the needs of investors and issuers. The proposal is also of importance to private equity firms investing in these companies.

The industry’s objections to a divisive EU Retail Investment Package are being heard in Brussels, it has become clear in recent weeks. Investors could end up pulling the short straw, critics argue. ABBL says a clearer definition of retail investors is important for private banks and wealth managers.

Though the EU consultation of the much-debated Sustainable Finance Disclosure Regulation is set to conclude only in December, the outlines of what will be termed as SFDR 2.0 are gradually emerging.

On 11 July 2023, the European Securities and Markets Authority (Esma) updated its guidance in relation to the definition of “advice”. This was rendered through a supervisory briefing which basically an update of the previous Q&As issued by CESR - Esma’s predecessor - on this topic.

With the collapse of the Green vote ending the country’s so-called “Gambia” (blue, green, red) coalition, Luxembourg’s financial sector is seen to stand to benefit from the near-certain return of the exiled Christian Socialists to governing. There’s an emerging consensus that a prime minister Luc Frieden would be good news for the financial sector and would also make finding solutions to problems besetting the country more likely.

The sustainable finance sector has faced a whirlwind over the past two years, and the storm shows no sign of abating soon. From greenwashing scandals and SFDR downgrades to unreliable ESG data and politicised debates in the US, the landscape is ever-evolving, almost on a daily basis.

The European Securities and Markets Authority (Esma), the EU’s financial markets regulator and supervisor, on Tuesday said it plans a comprehensive review next year of industry efforts to integrate sustainability in investment firms’ suitability assessment and product governance processes and procedures.

The review will be shaped as a Common Supervisory Action, or CSA, in which it closely involves national supervisors such as the CSSF in Luxembourg.

The European Securities and Markets Authority, Esma, on Thursday posted its 2024 work programme, emphasising digital and green transitions against a backdrop of economic challenges including inflation and geopolitical strains.

Esma said it plans to reinforce its market and risk monitoring efforts and support the European regulatory framework’s implementation, particularly in digital and sustainability sectors. This is in line with the regulator’s aim to address challenges for the European Union and its citizens, including investors.