January 21, 2021
On 7 January 2021, the Joint Committee of the European Supervisory Authorities (“
ESAs”) wrote to the European Commission, requesting “urgent” clarification on several important areas of uncertainty in the application of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “
SFDR”) prior to the application of the majority of its requirements on 10 March 2021.
One such area raised, which will be of particular importance to a number of fund managers, is whether the SFDR will apply to non-EU alternative investment fund managers (“
AIFMs”) when marketing funds in the EU under applicable national private placement regimes.
Application to non-EU AIFMs
To date, the industry has generally taken the view that non-EU AIFMs will be caught by the product level disclosure requirements of the SFDR, when marketing their funds in the EU. This is primarily as a result of the cross-reference in the SFDR to Articl
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European financial supervisory authorities have requested the European Commission to clarify key areas of ambiguity regarding the scope and application of the Sustainable Finance Disclosure Regulation
1 (SFDR), including its extraterritorial application.
The Joint Committee of the European Supervisory Authorities (ESAs) responsible for drafting the regulatory technical standards under the SFDR has written to the European Commission seeking clarity on “several important areas of uncertainty in the interpretation of SFDR.”
The ESAs also seek clarification about whether the SFDR applies to non-EU Alternative Investment Fund Managers (AIFM) when marketing under the national private placement regime of Article 42 of the Alternative Investment Fund Managers Directive
A brief recap
The main operative provisions of the Sustainable Finance Disclosure Regulation (SFDR)
1 will apply from 10 March 2021. The SFDR included provisions requiring the European Supervisory Authorities (ESAs) to prepare level 2 regulatory technical standards (RTS) to provide further detail and to assist in the application of the SFDR provisions. The SFDR states that six of the RTS must be delivered to the EU Commission by 30 December 2020 and one must be delivered by 30 December 2021. The ESAs prepared draft RTS
2 that were open for consultation until 1 September 2020 and, notwithstanding the deadline of 30 December 2020, the ESAs are still finalising the draft regulatory technical standards.
th December 2020, the UK and EU (together, the “
Parties”) announced a trade agreement that has since been approved by EU Member States and the UK Parliament (the EU Parliament will retrospectively approve it in January this year). The text of the treaty free trade agreement (the “
FTA”) can be found here.
Whilst the FTA covers a number of aspects of the trading and cooperation relationship between the UK and EU, it does not cover financial services to any significant degree.
The Parties agreed to a joint declaration on financial services (amongst other declarations) which confirms that the Parties agree to establish ‘structured regulatory cooperation’ on financial services, with the aim of establishing a durable and stable relationship between autonomous jurisdictions. Whilst this declaration states that the Parties will, by March 2021, agree a memorandum of understanding establishing the framework for this cooperation this is
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With the appointment, function, obligations, and
liability of alternative investment fund (AIF) depositaries having
undergone somewhat of an evolution in recent years, Head of
Depositary in our Luxembourg office, Ashweeni Basenoo examines their key functional
components.
The Alternative Investment Fund Managers Directive (AIFMD)
essentially laid down the regulations for the authorisation,
ongoing operation, transparency and reporting of EU and non-EU
alternative investment fund managers (AIFMs) that manage AIFs or
market AIFs into the EU.
The AIFMD was transposed into the Luxembourg Law of 12 July 2013