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Asset Management framework

 
Current topics - Financial policies

Asset Management framework

Context

Asset management has a key role to play in the further development of capital markets in particular for retail investors and the provision of sustainable investment options.

A strong growth of the EU investment fund sector has been observed since the 2008 financial crisis building on a strong legislative framework (UCITS and AIFMD). However improvements are needed in terms of competitiveness and integration with EU fund markets that remain fragmented along national lines and low average fund sizes. In addition, although the sector has demonstrated resilience during the Covid crisis, liquidity risks remain a concern for certain fund categories such as MMFs and those highly exposed to corporate debt and real estate assets.

Policy measures have been adopted for improving the cross-border distribution of funds and marketing communication requirements. A review of the AIFMD launched in October 2020 is also examining different areas where improvement may be needed including:

investor access, depositary rules, delegation rules, the treatment of third-country AIFs and the consistency between UCITS and AIFM rules. The ELTIF framework is also being examined in the context of the CMU action plan with the aim of removing the demand and supply obstacles that are hindering the development of these funds. Many market stakeholders are also in favour of developing EU level ESG standards for funds.

Concerning financial stability, measures have been proposed at the global level by the FSB and IOSCO for improving the assessment and the mitigation of liquidity and leverage risks posed by investment funds. Recommendations have also been made in the EU by the ESRB for enhancing the supervision of funds exposed to significant liquidity risks and expanding the use of liquidity management tools and stress testing. Reviewing MMF rules and improving the macro-prudential toolkit for fund activities has also been proposed by some regulators.

Contributions to the policy debate

Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)