In July 2024, they launched a consultation to determine whether the EU should repurpose specific micro-prudential instruments or introduce new macroprudential requirements.

In its response, EFAMA stressed that Europe needs more holistic and rigorous analyses to determine where financial stability risks lie in the system before developing new macroprudential policies for capital markets.

While the discussion is undoubtedly important, it also comes at a critical juncture when the EU is trying to grow its capital markets and develop innovative solutions to address pressing societal challenges such as the pension and climate finance gaps.

The consultation is officially about NBFI, however the main focus is unfortunately on asset management. Investment funds have proven resilient thanks to a robust existing regulatory framework. The recent UCITS/AIFMD review, which entered into force in April 2024, will further increase the sector’s resilience, introducing mandatory liquidity management tools, leverage limits for private credit funds, and additional reporting requirements.

Building on these premises, EFAMA makes the following recommendations to address some of the Commission’s concerns around risks in capital markets:
• Focus the policy discussion on capital markets rather than on the illusive ‘non-bank financial intermediation’ category.
• Develop an accurate analytical framework to identify potential pockets of risk that require further attention.
• Foster EU macroprudential supervisory capabilities, including through better data exchange among banking, insurance, and securities supervisors. Insufficient data sharing among these authorities results in insufficiently rigorous financial stability analyses.
• Introduce targeted capital market reforms by i) developing a consolidated tape for fixed-income securities and equities, ii) broadening the range of collateral that can be used to settle variation margin calls in centrally cleared markets, and iii) relieving constraints on dealers’ balance sheets during periods of stress.
• Resist introducing macroprudential measures to ensure that markets behave counter-cyclically during periods of stress (e.g., by tinkering with liquidity buffers).

Tanguy van de Werve, EFAMA director general, said: “Whether it is the growing pension gap or the environmental transition, Europe faces many unprecedented challenges. Asset management is part of the solution. We channel monies in a vast array of asset classes, from equities to fixed income to infrastructure, that will require additional investments in the coming years.

“However, for this to succeed, macroprudential authorities must accept that capital markets are different from, and inherently more volatile than, the banking market and avoid applying bank-like regulation to our industry. Their policies need to be fit for purpose and not redundant.”

Marin Capelle, EFAMA regulatory policy advisor, said: “Recent market disruptions have demonstrated that we need to apply a holistic lens when assessing financial stability. Unfortunately, many authorities continue to approach the topic with pre-determined and narrowly focused outcomes in mind, which prevents them from asking the right questions.”

The move will also improve the ability of companies to raise capital across the bloc.

The Commission outlined the four key legislative proposals that have been adopted.

European Single Access Point (ESAP)

The ESAP will offer a single access point for public financial and sustainability-related information about EU companies and investment products.

This will give companies more visibility towards investors, opening up more sources of financing.

This is particularly important for small companies in small capital markets, as they will more easily be on the radar screen of EU, but also international investors.

The ESAP will also contain sustainability-related information published by companies, which will support the objectives of the European Green Deal. As a common data space, the ESAP is a cornerstone of the EU’s Digital Strategy and the Digital Finance Strategy.

Review of the European Long-Term Investment Funds (Eltifs)

The review will increase the attractiveness of Eltifs for investors and their role as a complementary source of financing for EU companies.

It will also make it easier for retail investors to invest in Eltifs, in particular by removing the minimum €10,000 (£8,411, $11,213) investment threshold, while ensuring strong investor protection.

Since Eltifs are designed to channel long-term investments, the EC belieces they are also well placed to help finance the green and digital transitions.

The European Fund and Asset Management Association (Efama) said that “the revised framework has the potential to transform Eltifs into a product of choice for European investors and to become a cornerstone of the Capital Markets Union”.

While it welcomed many elements, including the removal of minimum investment amounts for retail investors and the broader scope of the eligible asset universe, Efama said some parts of the proposal “will require scrutiny” and “further clarity”.

Review of the Alternative Investment Fund Managers Directive (AIFMD)

The EC changes will also enhance the efficiency and integration of the Alternative Investment Funds market.

The proposal harmonises the rules related to funds that give loans to companies. This will facilitate lending to the real economy, while better protecting investors and ensuring financial stability.

The review also clarifies the rules on delegation, which allow fund managers to source expertise from third countries. The review will ensure that there is adequate information and coordination among EU supervisors, better protecting investors and financial stability.

Review of the Markets in Financial Instruments Regulation (MiFIR)

The adjustments to EU trading rules will ensure more transparency on capital markets.

They will introduce a ‘European consolidated tape’, which will give investors access to near real-time trading data for stocks, bonds and derivatives across all trading venues in the EU.

So far, this access has been limited to a handful of professional investors.

The review will also enhance the level playing field between stock exchanges and investment banks. In addition, it will promote the international competitiveness of EU trading venues by removing the open access rule.

International competitiveness

Valdis Dombrovskis, executive vice-president for An Economy that Works for People, said: “Europe needs vibrant and integrated capital markets to boost the real economy and bounce back after the covid-19 crisis.

“[These] proposals take us a significant step closer towards creating the Capital Markets Union. This is important for the growth of the EU economy. We achieve this by improving access to company and trading data, and gearing investments towards our sustainability and digital priorities.

“[This] package has a strong focus on helping small companies in small capital markets, making it easier for SMEs to find and access different sources of funding. It will also enhance the international competitiveness of the EU as a place to trade.”

Mairead McGuinness, commissioner responsible for financial services, financial stability and Capital Markets Union, added: “Capital markets play an essential role, alongside banks, in financing our economy but more progress is needed to move towards the completion of the Capital Markets Union.

“We are today taking action at various levels: making our capital markets more transparent, facilitating access to financial and sustainability-related data, and making investment products such as Eltifs and other alternative investment funds more attractive to investors and fund managers.

“This will better serve the needs of companies seeking finance to grow their business, which is crucial for the recovery and in meeting our green and digital objectives.

“But we are not stopping here; we are also announcing today more ambitious CMU initiatives to come in 2022 on access for companies to public markets, open finance, financial education and insolvency.”

David Gledhill will become Lloyds’ group chief operating officer, effective from August 2021.

He spent the last 11 years at DBS Bank in Singapore as group chief information officer and head of technology and operations.

Quilter Investment Platform

Executive director and managing director for UK distribution at the investment platform Scott Goodsir has left the company.

After spending seven years at the firm, he is taking a “break from financial services”, Goodsir said in a LinkedIn post.

C Hoare & Co

Diana Brightmore-Armour has become the private bank’s chief executive.

She was already part of the firm as a non-executive director since January 2020.

Most recently, she held the top job for UK and Europe at Australia & New Zealand Bank.

HSBC

HSBC Retirement Services, part of HSBC Life, has hired Paul McBride as chief operating officer.

He joins from Capita, where he spent the last five years as head of risk and governance for the Atlas Master Trust.

McBride will be responsible for the day-to-day operations including the development and management of the digital provision and data management.

Kairos

Julius Baer’s investment management subsidiary has made some changes to its senior management after it signed a co-operation agreement with independent asset manager Engadine Partners.

Marcello Sallusti, founder of Engadine Partners, will take on the role of chief investment officer at Kairos Investment Management, while retaining the same position at his firm.

Efama

Candriam’s chief executive Naïm Abou-Jaoudé has been elected president of the European Fund and Asset Management Association (Efama) for a two-year term.

At the general meeting, Peter Branner of APG Asset Management and Joseph Pinto of Natixis Investment Managers were elected vice-presidents as well.

James Hambro & Partners

The wealth manager has expanded its team with two senior hires.

Aaron McLoughlin joined as a financial planning director. He was previously at Rathbones, where he served as a senior financial planner.

Nick Ryder was named as business development director from Weatherbys Bank, where he worked for 20 years first as a non-executive director and then as head of investments.

Square Mile

The research house has bolstered its team with a double hire.

Ajay Vaid and Ibrahim Ishmail join as investment research analyst and investment research assistant, respectively.

Vaid was previously at Tilney, where he worked as an equity fund analyst for eight years.

Ishamil was an operational due diligence analyst within Barclays Wealth Management’s funds team.

Hawksmoor

The investment management firm is opening an office in Bath and has hired a team to run the operation.

Ian Bailey, head of office, and Rob Robson, senior investment manager, have joined to company to work alongside senior investment manager Dean Hodgson and business development manager Mike Topham.

The team will be made up of seven members of staff.

Bailey and Robson were both senior investment directors at Investec Wealth and Investment.

Tilney Smith & Williamson (TSW)

Chris Littlefair has joined the UK wealth manager’s West Sussex team as a financial planner.

He was previously at Aviva, where he spent three years as a financial adviser.

This is because the Regulatory Technical Standard (RTS) in the key information documents (Kids) “falls short of conducting a proper Level 1 review”, the trade body said.

It said that a review “is explicitly required by the Level 1 regulation and is overdue [by] more than one year”.

Efama believes this to be a “flawed review process, not tackling the heart of the issue”.

The problem with the Priips Kid is that industry players are finding it hard to create a “fully homogenised” retail investor documents including diverging investment and insurance products, with the goal of keeping information meaningful and not misleading.

Efama said: “In our opinion, both goals cannot be fully achieved simultaneously, and some trade-off will have to be found between meaningful and comparable information. This conundrum cannot be solved only by making technical changes at RTS level – despite the European Supervisory Authority’s (ESA) ongoing best efforts.

“We, therefore, understand and support industry associations and consumer representatives voicing their frustration that this issue is not tackled head-on through a Level 1 review.”

Lack of clarity

The trade body said that the current Ucits key investor information document (Kiid) functions well, and that the European Commission should work towards fixing “some of the current Kid’s biggest flaws before fund investors are confronted with the Priip Kid”.

Efama added that the revision of the RTS by the ESA is “a small step in the right direction”, but they have already been delayed for over a year, with the current deadline set for 31 December 2021.

It added: “The Commission’s original plan was to publish these new RTS by early 2020, ensuring that the financial industry would have sufficient time to implement wide-ranging changes before the end of 2021.

“This year’s deadline was originally meant as the official extension of the Priip Kid to retail funds after all the outstanding issues had been settled through the Level 1 review.

“[But] the RTS are delayed by more than one calendar year and there is still not enough clarity as to how they will ultimately look or when this process will be finalised.”

‘Massive operational undertaking’

As a result, Efama argues that fund managers and product providers simply do not have enough time to properly implement the “wide-ranging changes” in just 11 months.

This is why it claims that a 12-month extension of the Ucits exemption is necessary to make sure that the RTS, once published, are implemented correctly.

“It is important to bear in mind that the Priip Kid is one of the most visible documents to retail investors, meant to empower them to make the right investment decisions,” Efama said.

“If these documents are not implemented correctly, an essential tool will be missing to achieve the Capital Market Union’s goal of increased retail participation in the EU capital markets.”

The switch from Ucits Kiid to Priip Kid is a “massive operational undertaking” that requires a large amount of paperwork, with estimates stating this could require fund managers to produce “hundreds of thousands of Kids in aggregate”, the trade body said.

Additionally, the implementation of the rules cannot begin until the RTS are finalised, especially considering that the draft ones were rejected by the ESA in June 2020.

“Even small changes can have huge consequences in terms of operational implementation,” Efama added.

‘Recipe for disaster’

If this was not enough, fund management firms are struggling to mitigate the regulatory requirements with the effects of the global covid-19 pandemic.

Between allocating precise budgets for staff to transition to Priips within their IT plans for 2021; national lockdowns; and working-from-home requirements, fund managers may not be able to implement full changes effectively and within the timeline provided.

“The impossibly tight implementation deadline aside, it is equally important to talk about the future of the Ucits Kiid,” Efama said.

“The switch from the Ucits Kiid to the Priip Kid does not happen automatically and still requires timely legal changes to the Ucits Directive to ensure that retail investors are not presented with two Ki(i)ds simultaneously.

“This process should mark the end of the Ucits Kiid, meaning it should be fully deleted from the Ucits Directive. Considerations to keep the document alive for professional investors is without merit.

“The Ucits Kiid is, and has always been, a retail-investor document that is of little to no use for professional investors. It is also no longer fully Mifid-compliant and would require extensive revisions in the near future.

“Having two diverging different key information documents would also be a recipe for disaster.

“Efama, therefore, insists that another extension of the Ucits exemption of 12 months is necessary to ensure proper implementation.”

The UK-based advisory and asset management group has named James Barham as chief executive.

Barham is currently deputy chief executive and will succeed Mike Faulkner on 1 July 2019.

Faulkner will step down from the top job to focus on “the development of an innovative range of macro strategies” for the group.

IOOF

The Australian financial advisory business has hired Renato Mota as chief executive.

He will take on the role from Chris Kelaher who resigned in April 2019 after spending 10 years at the firm.

Mota has already been in the role of acting chief executive and was the group’s general manager of wealth management since 2016.

Stonehage Fleming

There has been a trio of promotions for the international family office’s South African business.

Marguerite Mastenbroek, current marketing director, and Layve Rabinowitz, who serves as head of the family office division in South Africa, have been promoted to partners.

Lehani Marais has been named a director of Stonehage Fleming Investment Management. She started her career at the firm in 2013 as an investment analyst.

EFAMA

The European Fund and Asset Management Association has appointed Nicolas Calcoen as president.

He is currently the deputy general manager of French asset management firm Amundi, and his term will have a two-year limit until June 2021.

Additionally, Myriam Vanneste, global head of product management of Candriam, and Jarkko Syyrilä, head of public affairs of Nordea Asset and Wealth Management have both been elected as vice presidents for the next two years.

Wealth Wizards

Digital financial advice business Wealth Wizards has hired Scanes Bentley as chairman.

He is also the chairman of financial services provider Vizolution and a board member of Danish technology services business Netcompany.

Bentley was also a partner and managing director of Accenture, a strategy consultancy multinational company.

Cazenove Capital

The international wealth manager has made a quadruple hire.

Glenn Dawson, Spencer Woolley and Alasdair Ogilvy have joined as portfolio directors, while Simon Mackie has been named wealth planning director.

All four join from Lloyds. The three portfolio directors worked across the corporate and private banking divisions, whereas Mackie was in charge of planning tax and wealth needs for UK and non-UK clients.

Carmignac

Justin Kew joins Carmignac as sustainability manager to bolster the firm’s ESG delivery.

He will be based in the independent asset management firm’s London office. He was previously senior ESG analyst at Fidelity International.

Hawksford

The international private client and fund services provider has expanded its Asian team with the appointment of Alice Quek as private client services director.

She will focus on developing and building relationship with clients and intermediaries in Singapore, Taiwan, Hong Kong and China.

Her role will be based in Singapore as she leaves consultancy firm Amicorp where she was a director.