European Securities and Markets Authority
Guidelines on performance fees in UCITS and certain AIFs - published by ESMA - 3 April 2020
The European Securities and Markets Authority (ESMA) has published a final report containing Guidelines on performance fees in undertakings for collective investment in transferable securities (UCITS) and certain alternative investment funds (AIFs). This follows ESMA’s consultation on draft Guidelines, published in July 2019. The Guidelines, which apply to fund managers and national competent authorities (NCAs), aim to promote convergence in the way NCAs supervise performance fee structures and provide fund managers with guidance on designing performance fee models.
The Guidelines address: (i) the calculation method for performance fees; (ii) consistency between performance fee models and funds’ investment objectives, strategies and policies; (iii) the frequency and crystallisation of performance fees; (iv) negative performance (loss) recovery; and (v) disclosure of performance fee models.
The Guidelines will apply two months after publication of their translation into the official EU languages.
ESMA Guidelines on performance fees in UCITS and certain AIFs
Press release
Financial Conduct Authority
COVID-19 - FCA publishes webpage setting out its expectations of funds - 6 April 2020
The FCA has published a new webpage setting out its expectations of funds in light of the COVID-19 pandemic. The webpage states that the FCA:
- has agreed that the publication of annual fund reports by authorised fund managers (AFMs) of UK UCITS schemes and non-UCITS retail schemes may be delayed by two months and that the publication of half-yearly fund reports may be delayed by one month;
- does not have supervisory concerns about firms holding general meetings of unitholders in a virtual format. However, fund documentation may contain requirements in addition to what is prescribed by its rules and therefore AFMs should consider any private law obligations under the terms of their fund documentation when making arrangements for meetings;
- expects firms already to have plans in place to deal with any compliance issues relating to limits on value at risk, including consideration of appropriate remediation action, market conditions and customers’ best interests; and
- confirms that where firms are struggling to obtain physical signatures for fund-related applications due to the COVID-19 pandemic, it is willing to accept electronic signatures on applications to authorise funds or approve changes to funds.
FCA webpage setting out its expectations of funds in light of COVID-19
Please see the General section for an item on the FCA’s guidance in relation to consumer communications in light of COVID-19 and increased market volatility.
