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General ESMA Updates

ELTIF: ESMA issuesdraft Regulatory Technical Standards

On 8 June 2016, the EuropeanSecurities and Markets Authority (ESMA) issued its Final Report and draftRegulatory Technical Standards (RTS) under the ELTIF Regulation.

ESMA’s key proposalsinclude:

  • The criteria to determine the circumstances in which financial derivatives are used solely for hedging purposes, based on those set out in the ‘CESR guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS on risk measurements’
  • That the life of an ELTIF should be determined with reference to the individual asset within the ELTIF portfolio which has the longest investment horizon
  • A non-exhaustive list of the types of market risk ELTIF managers should take into account when assessing the market for potential buyers ahead of the disposal of their asset
  • The criteria for the valuation of the ELTIF assets ahead of their divestment which specify the timing of the valuation and allow for valuations made under the AIFM to be taken into account
  • A grandfathering provision, whereby ELTIFs have one year after the RTS come into force to comply with these rules.

Following discussion with theEuropean Commission, ESMA has postponed the delivery of technical standards onthe cost disclosure information that must be included in the ELTIF’sprospectus. This is to take account of the work being undertaken on costdisclosures for PRIIPs.

Updates to ESMA Q&A


On 6 June 2016, ESMA published its updatedQ&A with regard to the implementation of the European MarketsInfrastructure Regulation (EMIR). The Q&A includes new answers in relationto the clearing obligation, specifically about the self-categorisation that isnecessary in order to establish which counterparties belong to whichcategories.


On 3 June 2016, ESMApublished an updated version of its AIFMD Q&A.

The Q&A includes newquestions and answers on:

  • The requirements regarding the domicile of EU AIFs that are marketed in the home Member State of the AIFM
  • The marketing of EU feeder AIFs which have a non-EU master AIF
  • Committed capital: and the calculation of the total value of assets under management and additional own funds


On 31 May 2016, ESMA published an updatedQ&A on the application of the European Social Entrepreneurship Funds(EuSEF) and the European Venture Capital Funds (EuVECA) Regulations. TheQ&A includes a new question and answer on the use of the designations ofEuSEF and EuVECA funds when marketed only in their home Member State.

Market AbuseRegulation

On 30 May 2016, ESMA published a Q&A onthe Market Abuse Regulation (MAR).

The Q&A addresses the question of thescope of the obligation to detect and report market abuse under MAR, andconfirms that ESMA considers that the obligation to detect and identify marketabuse or attempted market abuse under Article 16(2) of MAR applies broadly, and”persons professionally arranging or executing transactions” thusincludes buy side firms, such as investment management firms (AIFs and UCITSmanagers), as well as firms professionally engaged in trading on own account(proprietary traders).

Click here to view our article on the new market abuse regime.

Benchmark Regulation

On 27 May 2016, ESMA published a ConsultationPaper on draft implementing measures regarding the Regulation on Indicesused as Benchmarks in Financial Instruments and Financial Contracts, (theBenchmark Regulation). The consultation follows from the earlier discussionpaper published in February 2016 and seeks stakeholder feedback on the proposedregulatory framework for benchmarks, including in the following key areas:

  • Definition of Benchmarks
  • Measurement of the use of critical and significant benchmarks
  • Criteria for the identification of critical benchmarks
  • Endorsement of a benchmark / family of benchmarks provided in a third countries
  • Transitional provisions

Comments are invited until 30 June 2016. ESMAwill use the feedback received to finalise its technical advice.

The Benchmark Regulation was adopted by theEuropean Council on 17 May 2016. Once published in the Official Journal of theEU it will enter into force on the day after its publication. ESMA has ninemonths following the entry into force of the regulation to deliver its finaldraft regulatory and implementing technical standards to the EuropeanCommission.

MoU between ESMA and the CFTC onCCPs

A Memorandum of Understanding (MoU) has beensigned between ESMA and the US Commodity Futures Trading Commission (CFTC)under the European Market Infrastructure Regulation (EMIR). The MoU providesfor the exchange of information regarding Central Counterparties (CCPs), whichare established in the US and authorised or recognised by the CFTC and thathave applied for EU recognition under EMIR. The MoU is effective as of 02 June2016.

Contributed by Audrey Giles