Contents

• EU ELTIF Regulation review: ESMA letter highlights areas for review
• EU Regulation on cross-border distribution of investment funds: ESMA final report on draft ITS

EU ELTIF Regulation review: ESMA letter highlights areas for review

The European Securities and Markets Authority (ESMA) has published a letter it has sent to the European Commission highlighting the areas where it considers improvements could be made to the Regulation on European long-term investment funds (ELTIF Regulation).

ESMA includes an Annex I to its letter giving an overview of the ELTIF market based on ESMA data and an Annex II detailing ESMA's proposed changes to the ELTIF Regulation. In Annex II, ESMA comments that bringing ELTIFs more in line with the needs of investors, both retail and professional, would make it a more attractive investment vehicle for professional investors, as well as a savings' placement alternative for retail investors. It considers that the review of the ELTIF framework should aim to achieve the right balance between encouraging participation by retail investors while ensuring adequate standards of protection. It sets out proposed changes to the ELTIF Regulation in the following areas:

• eligible assets and investments;
• the authorisation process;
• portfolio composition and diversification;
• redemptions;
• disposal of ELTIF assets;
• prospectus and cost disclosure;
• local physical presence;
• specific requirements concerning retail investors; and
• other residual area.

EU Regulation on cross-border distribution of investment funds: ESMA final report on draft ITS

ESMA has published a final report on draft implementing technical standards (ITS) produced under Articles 5(3), 10(3) and 13(3) of the Regulation on the cross-border distribution of investment funds. The draft ITS focus on the publication of information by national competent authorities (NCAs) on their websites regarding the national rules governing marketing requirements for funds, and the regulatory fees and charges levied by NCAs relating to fund managers' cross-border activities. They also cover the notification of information by NCAs to ESMA for developing and maintaining a central database listing UCITS and alternative investment funds (AIFs) marketed cross-border on ESMA's website.

ESMA has advised that the final draft ITS largely reflect its earlier consultation proposals. A summary of the feedback received and ESMA's response to it, is set out in the final report.

ESMA has submitted the draft Implementing Regulation to the European Commission for endorsement. The Commission has three months within which to decide whether to adopt it, but may extend this period by a further month.

The draft Implementing Regulation states that it will enter into force twenty days after publication in the Official Journal of the European Union (OJ). It goes on to state that it will apply from the date of entry into force, with some exceptions. Articles1 and 3(1) shall apply from 2 August 2021, and Articles 5 and 6 shall apply from 2 February 2022.