Newcits investing in ucits compliant hedge funds download
Firstly, one may wonder whether the size of a market is a compelling argument to refrain from adopting horizontally consistent investor protection requirements. The fact that the Commission deliberately refrained from proposing horizontally consistent investor protection requirements in this area without providing objective reasons or compelling arguments therefore lends further support to the idea that the form-over-substance approach employed by EU legislators is mainly motivated by political considerations rather than investor protection and financial stability risks.
Footnote In fact, the vast majority of Member States allow non-EU AIFMs to market their funds to investors in their Member State and in most cases non-EU managers are not subject to any additional substantial rules but merely to registration or notification requirements. Footnote Hence, this is another area where political preferences prevail over regulatory consistency considerations.
Inconsistent Disclosures Equally, inconsistent regulatory approaches can be identified not only with regard to the availability of a marketing passport but also when looking at the content of marketing disclosures to be made to investors. One would generally assume that the Single Rulebook provides for a consistent set of disclosure requirements across all investment funds and only makes distinctions where this is justified due to the specific asset and product-specific features or the types of investors targeted.
However, the disclosure requirements are again solely based on the contrived legal form or label used with the newer AIFMD disclosure requirements being generally more granular on many key aspects compared to the UCITS framework. By way of an example, the AIFMD disclosure requirements are more explicit or granular on liquidity risk management, Footnote leverage Footnote and delegated functions. Footnote It is not evident why separate disclosure regimes exist or how the aforementioned differences could be justified.
This is particularly worth noting since the EuVECA marketing passport enables marketing to wealthier retail investors investing more than , EUR , whereas the AIFMD marketing passport does not encompass marketing to even the wealthiest retail investor. In the absence of explanations provided by the EU legislators in any official document, it is incomprehensible why these differences exist or how they could be justified.
Even if one tried to argue that preferential treatment which constitutes a derogation from the general principle of treating all investors fairly and therefore equally would be justifiable within investment funds sold to professional investors only, such an argument would quickly fall apart given the significant exposures of retail investors to AIFs referred to above and the fact that the EuVECA marketing passport also covers retail investors.
In this respect, the ELTIF Regulation provides for more detailed disclosure requirements Footnote and again deviates from the other rulebooks by requiring that preferential treatment for an ELTIF investor is not permitted where the fund is also marketed to retail investors. Footnote The same holds true for a variety of other risk management-related requirements.
By way of an example, the safeguards against conflicts of interest of the risk management function Footnote and obligations for the assessment, monitoring and review of the risk management systems Footnote in the AIFMD are significantly more granular than those set out in the UCITS framework. Footnote Moreover, managers of AIFs are required to regularly conduct stress tests which enable them to assess and monitor the liquidity risk of their AIFs Footnote and report the results of these stress tests to their supervisors.
Footnote Table 4 Is the manager obliged to carry out stress tests? The AIFMD framework even provides for specific Level 2 requirements on how the stress tests should be conducted, Footnote whereas the UCITS texts remain entirely silent on these important risk management matters as well as on the reporting of the stress testing results to supervisors. Different Approaches to the Calculation of Leverage Another risk management-related area where significant regulatory differences can be identified relates to the use and measurement of leverage Table 5.
Footnote The AIFMD requires detailed leverage-related disclosures to investors Footnote and managers have to report regularly to competent authorities on the use of leverage and shall demonstrate that the leverage limits set by them for each AIF they manage are reasonable and comply with those limits at all times this will be described further in Sect.
To this end, the leverage calculation methods are further specified in the AIFMD Level 2 provisions which provide detailed rules on the calculation under the gross and commitment methods. Footnote Table 5 What is the calculation method for leverage? Even the Level 2 requirements on the calculation of UCITS global exposure include only a couple of references to leverage without providing any further clarifications as to the precise definition of leverage or the calculation thereof.
Even if they were upgraded in the future to ESMA Guidelines, they would only be subject to a mere comply-or-explain mechanism. Footnote Besides these important legal differences, it is interesting to note that even in terms of substance, the AIFMD leverage regime and UCITS global exposure requirements as specified in the CESR Guidelines follow different approaches on the accepted calculation methods, in particular concerning the use of the VaR model.
This is because the CESR Guidelines allow for the use of VaR, although they acknowledge that the VaR approach is a measure of the maximum potential loss due to market risk rather than leverage. Footnote It is therefore not surprising that many of the UCITS facing liquidity problems in recent years reportedly also made more extensive use of leverage.
In these cases, poor past performance in combination with illiquid asset holdings prompted investors to withdraw their money, which resulted in almost bank-like runs. Footnote Leverage Ban for Venture Capital With regard to investments in unlisted securities issued by start-up companies Portfolio B , it is additionally worth noting that despite the inherent risks involved in venture capital investments, the EuVECA Regulation does not provide for any specific risk management rules apart from the general requirements on conflicts of interest.
The recitals explain that the leverage ban is to ensure that EuVECA do not contribute to systemic risk. Footnote From a logical consistency perspective, it remains unclear why leverage in the relatively small EuVECA sector, Footnote which is negligible in size when compared to the AIF and UCITS market less than a few basis points , would pose systemic risks that needed to be addressed through a regulatory leverage ban whereas the large-scale leverage used by hedge fund AIFs and alternative UCITS or Newcits would not.
Footnote Hence, this even suggests that the leverage ban introduced in the EuVECA Regulation rather addresses an imaginary or theoretical risk that has never really existed in the relevant market. Consequently, the EU legislation treats the question of whether and to which extent retail investors should be exposed to leveraged investment portfolios in a largely inconsistent way.
Since the majority of Member States allow non-EU managers to market AIFs in their jurisdictions without additional requirements beyond the minimum list set out in the AIFMD as further elaborated in the sections above, this regulatory inconsistency creates an unlevel playing field between EU and non-EU managers which appears unjustifiable from an investor protection perspective.
From a financial stability point of view, it appears equally illogical not to prescribe consistent risk management standards for all AIFs marketed to EU investors, irrespective of the location of the manager of the fund, especially bearing in mind that these marketing activities amount to the NAV of 1.
Footnote By way of an example, in the case of a suspension of redemptions due to exceptional circumstances as witnessed most recently due to the liquidity and valuation problems faced by many UCITS and AIFs during the COVID crisis Footnote , the UCITS framework requires the fund to inform without delay the home authority of the Member State where it is established as well as the authorities of the Member States where it is marketed of its decision to temporarily suspend the redemption rights of its investors.
Footnote Moreover, the powers to require fund suspensions lies with the home NCA of the fund. Footnote In that case, it shall communicate its decision without delay to the host NCAs where the fund is marketed and, in the case of cross-border management, to the home NCA of the manager. Footnote In contrast, the AIFMD remains entirely silent on any obligations for either funds or managers to inform their home or host authorities of the suspension. Similar to the UCITS framework, the AIFMD requires that national authorities shall have the powers to impose a temporary suspension where this is in the interest of investors or the public.
Footnote However, unlike the UCITS Directive, it is not the home authority of the fund that decides on this, but the home authority of the manager. Footnote Notwithstanding this, the AIFMD provides for requirements that would under certain circumstances allow the authorities in the Member States where the fund is marketed or managed to impose suspensions.
Footnote In light of these significant inconsistencies, and given the systemic risk implications of fund suspensions in particular, the European Systemic Risk Board ESRB made recommendations to the European Commission in to clarify the roles and obligations of NCAs and the cooperation between them in cross-border cases.
Footnote Collection and Exchange of Macro-prudential Data Regulatory inconsistencies do not only exist with respect to national supervisory competencies and powers but also regarding access to and the exchange of macro-prudential data i amongst national authorities and ii between national and European authorities. Footnote Table 6 Is the portfolio subject to systemic risk reporting? Footnote Exchange of Supervisory Information Beyond this, the supervisory regimes also differ with respect to the information made available to ESMA on day-to-day supervisory matters.
In particular, NCAs have to share with ESMA the information on the basis of which they granted individual EuVECA licences Footnote and ESMA is explicitly obliged to organise and conduct peer reviews in order to strengthen the consistency of national registration processes Footnote as well as peer reviews to strengthen the consistency of national processes in relation to supervisory and investigatory powers carried out by competent authorities.
This is because NCAs are obliged to use the information reported by AIFMs for the purposes of identifying the extent to which the use of leverage contributes to the build-up of systemic risk in the financial system, to risks of disorderly markets or to risks to the long-term growth of the economy. Footnote Moreover, ESMA is empowered to determine, taking into account any advice from the ESRB, that the leverage employed by an individual AIFM, or by a group of AIFMs, poses a substantial risk to the stability and integrity of the financial system and to issue advice to NCAs specifying the remedial measures to be taken, including leverage limits.
Footnote Table 7 Is the portfolio subject to a leverage monitoring regime? However, while the AIFMD includes the aforementioned supervisory mechanisms to ensure that supervisors monitor and address systemic risks posed by leverage, no such requirements are foreseen in the UCITS framework. Footnote Consequently, an unleveraged plain vanilla US mutual fund or index-tracking US ETF would be subject to a stricter regulatory sporting and supervisory monitoring regime in this respect than an alternative UCITS or Newcits employing hedge fund strategies with complex derivatives and high amounts of leverage.
Conclusions The analysis of how four key issues are addressed in the EU investment management legislation reveals significant negative unintended consequences of the form-over-substance approach. In particular, the post-crisis legislative approach is detrimental to achieving regulatory consistency despite the increased importance assigned to the principle of consistency in EU law since the Maastricht and Lisbon Treaties.
The idea that one could create a truly consistent regulatory framework by employing a complex patchwork approach with a multitude of separate directives and regulations that need to be individually negotiated, adopted and implemented by a variety of EU and national institutions and then again revised and readjusted to ensure consistency with the other evolving pieces of regulation, has proven to be inadequate to accomplish the desired outcome.
Ironically, the singleness of the EU Single Rulebook is a key component without which it will be difficult, if not practically impossible, to achieve the desired policy goal. A true Single Rulebook would require working on the premise that all market participants performing similar financial services and all similar financial products are treated equally by EU law, unless there is an objective reason for unequal legal treatment.
In this context, any regulatory divide should be duly justified from the viewpoint of the actual risks posed for investor protection and financial stability and not be merely based on the contrived legal form and unsubstantiated assumptions or political preferences.
In doing so, EU financial legislation would need to move away from the form-over-substance approach currently being employed, which is based on the creation of artificial legal forms and labels e. In addition, the EU Single Rulebook currently refrains from regulating many core questions as seen above and instead simply leaves them to national legislation. This approach of combining a multitude of EU rulebooks instead of a single rulebook with a variety of different national rulebooks with large-scale national discretion on key issues has not only significantly increased the complexity of the overall regulatory framework for investors, financial market participants and supervisors but also constitutes an additional practical barrier to achieving consistent regulatory and supervisory outcomes across the EU Member States.
In light of the findings of this analysis, a more pragmatic alternative legislative approach to achieving a true Single Rulebook would be to follow a risk-based substance-over-form approach to financial regulation. This would require the key rules to be codified in a single EU regulation that is directly applicable in all EU Member States and relies on actual risk indicators e. Consistency in financial regulation therefore requires a legislative framework that is non-discriminatory in the sense that it treats risks that are similar in all relevant aspects alike, regardless of the labels or contrived legal forms used.
Otherwise, regulatory consistency in the area of EU financial regulation is in danger of becoming a mere buzzword instead of the constitutional principle that it ought to be. Accessed 28 October Derossi et al. Substance-over-form is a long-lasting principle in national and international accounting and tax laws which requires that the economic substance of transactions and events should be considered rather than just their legal form in order to present a true and fair view of the affairs of the entity, see Meyer In this context, Baker and Hayes argued that the Enron scandal could have been potentially avoided if the substance-over-form approach had been applied.
Duke , p 7. Franklin , p First sub-paragraph of Art. C of the TEU. Tietje , p You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbq:journl:ip See general information about how to correct material in RePEc. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact:. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here.
This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
There is a large and increasing range of UCITS compliant funds out there, but despite their tighter regulation and frameworks, investors still need to understand the risks they are undertaking, the structures of the funds and their differences and similarities to mutual funds and hedge funds.
| Newcits investing in ucits compliant hedge funds download | Bollinger bands forex tsd synergy |
| Investing advice apps | 65 |
| Newcits investing in ucits compliant hedge funds download | Otherwise, regulatory consistency in the area of EU financial regulation is in danger of becoming a mere buzzword instead of the constitutional principle that it ought to be. Footnote 81 Authorisation Threshold or no Threshold? The AIFMD framework even provides for specific Level 2 requirements on how the stress tests should be conducted, Footnote whereas the UCITS texts remain entirely silent on these important risk management matters as well as on the reporting of the stress testing results to supervisors. Footnote Notwithstanding this, the AIFMD provides for requirements that would under certain circumstances allow the authorities in the Member States where the fund is marketed https://codebonus1xbet.website/soccer-cleat-covers/154-forexearlywarning-login-www.php managed to impose suspensions. In particular, the post-crisis legislative approach is detrimental to achieving regulatory consistency despite the increased importance assigned to the principle of consistency in EU law since the Maastricht and Lisbon Treaties. From a financial stability point of view, it appears equally illogical not to prescribe consistent risk management standards for all AIFs marketed to EU investors, irrespective of the location of the manager of the fund, especially bearing in mind that these marketing activities amount to the NAV of 1. |
| How to swing trade bitcoin | Footnote Hence, this even suggests that the leverage ban introduced in the EuVECA Regulation rather addresses an imaginary or theoretical risk that has never really existed in the relevant market. Footnote Moreover, ESMA is empowered to determine, taking into account any advice from the ESRB, that the leverage employed by an individual AIFM, or by a group of AIFMs, poses a substantial risk to the stability and integrity of the financial system and to issue advice to NCAs specifying the remedial measures to be taken, including leverage limits. Footnote 88 The thresholds are even increased to million EUR when the portfolios of AIFs consist of AIFs that are both unleveraged and have no redemption rights exercisable during a period of five years following the date of initial investment in each AIF. Unnecessary Trade-offs here regard to Portfolio C, another important exception can be observed from the general rule that AIFs cannot be marketed via an EU passport to retail investors. In its judgment of 6 December in the case of Beian v. Footnote 76 However, the AIFMD rules are complemented by a detailed set of Level 2 provisions, Footnote 77 specifying, inter alia, the due diligence obligations, required features of the delegate, effective supervision by competent authorities, objective reasons for delegation, conflicts of interest, consent and notification of sub-delegation and the maximum extent of delegation, whereas the UCITS Level 2 rules remain largely silent on these important issues. Footnote Hence, the inconsistent legal treatment is not based on actual risks for investors or financial stability but seems rather to be motivated by political ambitions and preferences. |
| Newcits investing in ucits compliant hedge funds download | 486 |
| Newcits investing in ucits compliant hedge funds download | Mam forex meaning |
| Forex hovedbanen | For investors in this type of vehicle, this is a risk. Footnote It is not evident why separate disclosure regimes exist or how the aforementioned differences could be justified. Footnote Table 6 Is the portfolio subject to systemic risk reporting? In addition, the EU Single Rulebook currently refrains from regulating many core questions as seen above and instead simply leaves them to national legislation. Footnote Collection and Exchange of Macro-prudential Data Regulatory inconsistencies newcits investing in ucits compliant hedge funds download not only exist with respect to national supervisory competencies and powers but also regarding access to and the exchange of macro-prudential data i amongst national authorities and ii between national and European authorities. In this context, Member States are permitted to reduce or remove the thresholds altogether or to introduce additional national requirements for managers below the thresholds and the product regulation of AIFs with the applicable investment restrictions even being left entirely to the discretion of national legislation. |
| How will cryptocurrency impact the future | Footnote Moreover, managers of AIFs are required to regularly conduct stress tests which enable them to assess and monitor the liquidity risk of their AIFs Footnote and report the results of these stress tests to their supervisors. In these cases, poor past performance in combination with illiquid asset holdings prompted investors to withdraw their money, which resulted in almost bank-like runs. This allows to link your profile to this item. In this context, Member States are permitted to reduce or remove the thresholds altogether or to introduce additional national requirements for managers below the thresholds and the product regulation of AIFs with the applicable investment restrictions even being left entirely to the discretion of national legislation. Different Approaches to the Calculation of Leverage Another risk management-related area where significant regulatory differences can be identified relates to the use and measurement of leverage Table 5. |
| Ethereum classic fees | 606 |
IRISH HORSE RACING BETTING TIPS
It includes the server which supports. Jason from Service Provider Partners. TeamViewer is a fools the expired application into thinking can vary depending allowing users access.
3 комментарии к “Newcits investing in ucits compliant hedge funds download”
Akinora
on11.12.2019 в 13:56 говорит:
parasrampuria forex andheri raatein
Vodal
on14.12.2019 в 14:58 говорит:
action plan for better communication in the workplace
Zulkidal
on16.12.2019 в 08:09 говорит:
op amp non investing adalah ny