Funds and asset management regulatory news, December 2020 # 3

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Selected regulatory updates of interest to the funds and asset management sector. This update reports on ESMA's final report on guidelines addressing leverage risks under the AIFMD.

Contents

  • AIFMD: ESMA final report on guidelines addressing leverage risks

Following a seasonal break, the next update will be published on 11 January 2021

AIFMD: ESMA final report on guidelines addressing leverage risks

The European Securities and Markets Authority (ESMA) has published its final report containing guidelines under Article 25 of the Alternative Investment Fund Managers Directive (AIFMD). Article 25 provides for national competent authorities (NCAs) to identify the extent to which the use of leverage in the alternative investment fund sector contributes to the build-up of systemic risk in the financial system, risks of disorderly markets, or risks to the long-term growth of the economy.

The guidelines provide NCAs with a set of indicators to consider when performing their risk assessment and a set of principles that they should consider when calibrating and imposing leverage limits. They follow the two-step approach introduced by the International Organization of Securities Commissions and translate this approach into the EU framework.

The guidelines will now be translated into the official EU languages and published on ESMA's website. They will apply two months after the publication of the translation.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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