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ESMA Promotes Convergence in The Supervision of Costs in UCITS And AIFS
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, yesterday published a supervisory briefing on the supervision by National Competent Authorities (NCAs) of costs applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs). This briefing comes in response to the need to improve convergence across NCAs in the approach to undue costs.
ESMA’s first annual statistical report in January 2019 on costs and performance of retail investment products, showed the significant impact of costs on the final returns for investors. Following the publication of this report, ESMA started work with the NCAs to assess the different national approaches to the supervision of the cost-related provisions under UCITS AIFMD.
To reduce the risk of regulatory arbitrage and ensure equal levels of investor protection throughout the EU, ESMA has produced this supervisory briefing addressed to NCAs which focuses on how NCAs supervise the relevant cost-related provisions under UCITS and AIFMD and on the managers’ obligation to prevent undue costs being charged to investors.
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