ESMA to assess UCITS framework
08 January 2021 France
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The European Securities and Markets Authority (ESMA) is initiating a common supervisory action (CSA) to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework.
The CSA will be launched with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union and will be conducted during 2021.
The CSAs will also aim to assess the obligation of not charging investors with undue costs. The NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020.
Entities employing efficient portfolio management (EPM) techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on exchange-traded funds and other UCITS issues will also be evaluated by the CSAs.
The work will be done on the basis of a common methodology developed by ESMA.
The CSA assessment framework, including scope, methodology, supervisory expectations and timeline, results from a joint effort to carry out comprehensive supervisory action in a convergent manner.
Throughout 2021, NCAs will share knowledge and experiences through ESMA to ensure supervisory convergence in how they supervise cost-related issues, and enhance the protection of investors across the EU, the authority explains.
“Ensuring greater convergence in the supervision of costs is an integral part of ESMA’s broader efforts on the cost of retail investment products and is key to improving investors’ confidence in financial markets and reducing costs associated with obtaining financial products,” comments ESMA.
The topic of costs and performance for retail investment products was identified as one of the Union Strategic Supervisory Priorities for NCAs.
Under this priority, ESMA said that NCAs would undertake supervisory action in 2021, coordinated by ESMA, on costs and fees charged by fund managers.
The CSA will be launched with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the European Union and will be conducted during 2021.
The CSAs will also aim to assess the obligation of not charging investors with undue costs. The NCAs will take into account the supervisory briefing on the supervision of costs published by ESMA in June 2020.
Entities employing efficient portfolio management (EPM) techniques to assess whether they adhere to the requirements set out in the UCITS framework and ESMA Guidelines on exchange-traded funds and other UCITS issues will also be evaluated by the CSAs.
The work will be done on the basis of a common methodology developed by ESMA.
The CSA assessment framework, including scope, methodology, supervisory expectations and timeline, results from a joint effort to carry out comprehensive supervisory action in a convergent manner.
Throughout 2021, NCAs will share knowledge and experiences through ESMA to ensure supervisory convergence in how they supervise cost-related issues, and enhance the protection of investors across the EU, the authority explains.
“Ensuring greater convergence in the supervision of costs is an integral part of ESMA’s broader efforts on the cost of retail investment products and is key to improving investors’ confidence in financial markets and reducing costs associated with obtaining financial products,” comments ESMA.
The topic of costs and performance for retail investment products was identified as one of the Union Strategic Supervisory Priorities for NCAs.
Under this priority, ESMA said that NCAs would undertake supervisory action in 2021, coordinated by ESMA, on costs and fees charged by fund managers.
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