The reform of European Supervisory Authorities is on the move. The Bulgarian EU Council Presidency has today proposed to EU Member States that the supervision of European long-term investment funds (ELTIFs), European social entrepreneurship funds (EuSEFs) or European venture capital funds (EuVECAs) should not be given to the European Securities and Markets Authority (ESMA). Instead, it wants to delete this clause completely from the EU Commission’s draft recommendation.
‘The EU Council Presidency’s proposal is a positive signal. We are critical of plans to place the direct supervision of funds in the hands of ESMA, as this would result in the unnecessary duplication of supervision by national authorities and ESMA, and drive up costs for investors,’ says Thomas Richter, chief executive officer of the German Investment Funds Association (BVI).
BVI also warns against transferring other funds-related supervisory responsibilities to ESMA: ‘Were ESMA to be given the task of supervising certain types of investment funds, it’s just a small step to extend this to the direct supervision of Ucits and AIFs. This would be bound to lead to conflicts of jurisdiction between ESMA and national supervisory authorities,’ comments Thomas Richter. He continued that, given the national supervisory authorities know their respective home markets better than ESMA, product supervision must remain in their hands. He is therefore calling on the Council to accept the EU Council Presidency’s proposal and to include it in the negotiations.
It is also critical of other EU Commission plans aimed at reforming European supervisory authorities, including giving greater control to ESMA over significant outsourcing to non-member states.