EUROPE: Compliance Table – Guidelines on performance fees in UCITS and certain types of AIFs

Thursday February 11 2021

On 10^th February 2021, the European Securities and Markets Authority (ESMA) has published the Guidelines compliance table on performance fees in UCITS and certain types of AIFs (ESMA34-39- 992).

The majority of jurisdictions comply or intend to comply with the guidelines.

The following competent authority do not comply with ESMA’s Guidelines on performance fees in UCITS and certain types of AIFs:

Sweden – Finansinspektionen (FI) : Finansinspektionen does not comply and does not intend to comply with the guideline in respect of open-ended AIFs which are allowed to be marketed to retail investors on the basis of the funds being admitted to trading on a regulated market. AIFs admitted to trading on a regulated market are, after authorisation by Finansinspektionen, allowed to be marketed to retail investors. The Swedish regulation does not provide specific rules on the fee structure of such funds. Finansinspektionen is therefore unable to comply with the guideline in respect of these funds.

The following competent authorities intend to comply with ESMA’s Guidelines on performance fees in UCITS and certain types of AIFs:

Bulgaria – Financial Supervision Commission (FSC) : In Bulgaria the guidelines would require further legislative amendments of the existing legislation in order to be effectively integrated in the Bulgarian legal system. The respective legal provisions are expected to come into force when necessary legislative proceedings have been completed within the Bulgarian Parliament’s legislative procedure.

Spain – Comisión Nacional del Mercado de Valores (CNMV) : By such time as the necessary legislative or regulatory amendments have been completed. In this sense, article 5 of Royal Decree 1082/2012 and Rule 4 of Circular 6/2008 of the CNMV set up a performance reference period of three years not on a rolling-basis for the HWM model.

Meanwhile paragraphs 40 and 41 of the guidelines establish a five-year performance reference period and on a rolling basis for the HWM model. For these reasons article 5 of Royal Decree 1082/2012 and Rule 4 of Circular 6/2008 of the CNMV ought to be amended in order to be aligned to paragraphs 40 and 41. CNMV is already conveying to the Government the need to consider those amendments. National rules are compliant with the rest of the Guidelines (apart from the aforementioned paragraphs 40 and 41) and CNMV already complies with them.

Hungary – Magyar Nemzeti Bank (MNB : In this case the MNB intends to implement these ESMA Guidelines in the form of MNB Recommendations, which has a formal approval procedure including an obligatory consultation phase. The MNB Recommendations’ internal approval procedure requires adoption by the Financial Stability Council, therefore the different phases shall be harmonised with the meeting dates of the FSC and by considering the length of the consultation period. The result of all these considerations is the date provided in the compliance notification.

Italy – Commissione Nazionale per le Società e la Borsa (CONSOB) : This deadline has been identified in light of the time needed to finalise the amendments to L2 national Regulations including provisions on performance fees.

Romania – Romanian Financial Supervisory Authority (ASF) : The guidelines will be incorporated into the national legal framework by 1 April 2021.

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