Capital markets union: Council adopts new rules on alternative investment fund managers and plain-vanilla EU investment funds

The EU Council on 26th February issued a press release on the adoption of new rules on alternative investment fund managers and plain-vanilla EU investment funds. These rules aim to improve European capital markets and strengthen investor protection in the EU.

The adopted directive amends the alternative investment fund managers directive, which governs managers of hedge funds, private equity funds, private debt funds, real estate funds and other alternative investment funds in the EU.

Furthermore, the directive updates the framework related to Undertakings for the Collective Investment in Transferable Securities (UCITS), which are essentially standard EU-aligned retail investment funds like unit trusts and investment companies.

These new regulations contribute to the unity of asset management markets in Europe and update key regulatory facets.

The regulations ensure better liquidity management tools are available, introducing new specifications that managers need to implement these instruments. This should ensure fund managers are well prepared to handle significant withdrawals during financial unrest.

The modified directive also embraces an EU framework for loan-originating funds, essentially funds offering credit to enterprises, supplemented with various requirements to counteract risks to financial security and guarantee suitable investor safeguarding.

The new directive stipulates enhanced regulations for the delegation by investment managers to third parties, allowing them to access the top-notch resources from market specialists while ensuring strict supervision and maintaining market integrity.

Other crucial elements of the new regulations include improved data sharing and inter-authority cooperation and novel measures to pinpoint excessive costs that could be imposed on funds and consequently, their investors. Measures have also been enacted to prevent potential misleading nomenclature to further safeguard investors.

Get in touch

Karl Mercieca, Financial Services Regulatory Compliance Partner [email protected]

Maria Calleja, Financial Services Regulatory Compliance Senior Manager [email protected]

Ryan George, Regulatory Compliance Senior Consultant [email protected]