The European Fund and Asset Management Association (EFAMA) has reiterated concerns about possible new powers mooted for the European Securities and Markets Authority (ESMA) regarding managers from non-EU countries operating in the EU.
A report in the Financial Times over the weekend suggested that ESMA’s proposed oversight of national regulators’ authorisation of delegation agreements could be scrapped. One person close to the process confirmed to IPE that the report was accurate, but warned that any move had yet to be “set in stone”.
Peter de Proft, director general of EFAMA, said there was no justification for giving ESMA any additional powers of oversight.
“We believe this would lead to a more bureaucratic, costly and inefficient process regarding delegation and outsourcing, especially into third countries, and would materially weaken the time to market for relevant activities,” he said.
A spokesperson for the European Commission said no decision had yet been taken.
As part of its review of the European Supervisory Authorities (ESAs), in September the Commission proposed new rules around “coordination on delegation and outsourcing of activities”.
These included, for example, that a national regulator should notify ESMA when it planned to authorise an asset manager to outsource or delegate to a non-EU country a material part of its activities or any key functions, “to benefit from the EU passport while essentially performing substantial activities or functions outside the Union”.
The European Parliament’s Economic and Monetary Affairs Committee said the proposal “provides for inclusion of the ESA for notifications, monitoring and recommendations, both for authorisations and on an ongoing basis, so that outsourcing, delegations and risk transfers to a third-country entity are subject to supervisory review under the responsibility of the executive board”.
The Commission’s proposal caused consternation in the fund industry.
EFAMA’s de Proft said: “Our view is that delegation is already a reliable, well-functioning and tested model, central to ensuring investor choice with the ability of EU investors to access world leading investment expertise and the associated improved investor outcomes.”
A spokesperson for the Commission confirmed that under its proposals, ESMA should be able to carry out “ex-ante analysis of planned delegations into third countries by EU asset managers” to ensure compliance with EU rules.
At present, the measures are under review by the European Parliament and Council.