The European Fund and Asset Management Association has thrown its weight behind the European Commission’s bid for greater regulatory convergence through amendments to the requirements of the Capital Markets Union.
Last month, the Commission proposed legislation to amend the European System of Financial Supervision in order to reinforce integrated supervision, thereby strengthening the Capital Markets Union (CMU) and leading to greater financial integration.
In a statement, EFAMA said: “EFAMA fully supports supervisory convergence as a crucial element in ensuring a successful Capital Markets Union through supervision, and integral to removing barriers to cross-border provision of financial services. The ESAs should ultimately ensure further capital markets integration and support building an efficient value chain in the interest of end-investors.”
EFAMA accepted that the Commission’s proposal was “complex and wide-ranging”, and said that both EFAMA and its members are in the process of analysing the finer details.
EFAMA noted that the proposal gives new “supervisory and intervention powers” to that European Securities and Markets Authority (ESMA), “including direct supervision on a number of EU regulated funds” such as ELTIFs, EuSEFs and EuVECAs.
It would, the organisation said, also grant additional powers that would help to ensure coordinated supervisory action in the areas of delegation and outsourcing.
‘Crucial to act against letterbox-entities’
EFAMA sounded a note of caution in saying that it should be acknowledged that delegation is already a “reliable, well-functioning and tested model” that was central to investor choice.
EU investors, it said, can already access “world-leading investment expertise and the associated improved investor outcomes”, adding that the EU legislative framework already provides “robust standards” for the asset management industry that prevents letter-box entities.
“In this context, and in line with the CMU’s overall aim to establish stronger saving patterns and develop non-bank funding sources in Europe,” EFAMA concluded, “we need to ensure that any review of the European supervisory set-up fosters these principles. Ultimately, from an EFAMA point of view, nurturing UCITS’ global appeal, is of paramount importance.
“EFAMA looks forward to constructively engaging with policymakers in Council and Parliament, to maintain investor choice and outcomes and to improve European capital markets within a global framework, as this proposal begins its legislative journey,” it said.