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Funds urged to engage with ESMA’s consultation on cross-border marketing

Investment fund managers need to “closely monitor” the outcome of a new consultation on cross-border marketing launched by the European Securities and Markets Authority (ESMA), according to one legal expert.

Oliver Crowley, investment funds expert at Pinsent Masons, said the conclusions the ESMA draws from the study, launched earlier this month, could have “an impact on information required to be provided by funds and their managers” in future. He added: “As ever, we encourage market participants to engage in the consultation, including through industry bodies, to ensure a practical outcome.”

His comments came after the ESMA issued a call for responses to new proposals on the information that firms will be required to provide when informing regulators of their cross-border marketing and management activities under the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the Alternative Investment Fund Managers Directive (AIFMD).

The consultation sets out the text of draft implementing technical standards and regulatory technical standards, which will govern the form of template letters designed to ensure that notifications are consistent across member states and to avoid differences in national approaches. The draft technical standards also set out how a regulator in one member state should communicate relevant notification files to regulators in another where cross-border marketing and management activities are expected.

The proposed template letters for marketing UCITS and AIFs would require funds to provide information about their business activities as well as the name, address and contact details of each third-party distributor in the ‘host’ and the ‘home’ member state. The ESMA consultation also asks whether firms would be able to provide information about their capital-raising targets as well as how long they intend to conduct the marketing and subsequent notifications of any material change in that information.

The ESMA’s consultation will close on 9 September 2022. The regulator has said that it expects to publish its final report on cross-border marketing and management activities in early 2023, before draft implementing technical standards and regulatory technical standards are submitted to the European Commission.

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