ITALY – New rules for Italian investment funds have come into force, affecting investment activities, limits and risk management.

Changes to regulations on collective asset management, enacted on 8 May, took effect on 14 June, according to Assogestioni, the Italian association of asset managers.

The amended rules are a national implementation of EU guidelines from the European Securities and Markets Authority (ESMA) on matters relating to ETFs and other mutual funds, it said.

They introduce a series of modifications, mainly regarding the risk management of open-ended, harmonised OICRs (Organismi d'Investimento Collettivo del Risparmio), covering the funds' investment activities, limits and risk management systems.

However, the changes could also affect open non-harmonised OICRs, reserve funds and closed-end funds, Assogestioni said, because of way these vehicles are referenced to harmonised OICRs.

On top of this, some measures affect the financial statements of open-ended funds.

The association also pointed out that the ESMA guidelines provide specific guidance for UCITS funds using techniques for efficient portfolio management, where total return swaps are used, or where the fund is exposed to indices via derivatives or by replicating the performance of indices.

The guidelines also cover counterparty risk and collateral management in the case of transactions with OTC derivative instruments, as well as techniques for efficient portfolio management, it said.

While the amended regulations took effect at the end of last week, the association said ESMA has indicated there are transitional arrangements at a European level.

Investment funds established before the new rules came in will have 12 months from 14 June to comply.