Paul Stratford, Director in Wealth and Asset Management, EMEIA, EY comments on the passing of UCITS V…
The Asset Management industry will be experiencing a kind of relief that UCITS V has been passed before the parliamentary elections in May. There has been considerable political debate about the UCITS V, not least about remuneration, and an influx of new MEPs could have risked a time-consuming re-run of the debate. Now at least Managers know what they have to grapple with.
In terms of next steps, it is up to ESMA to come up with technical guidance on implementation. ESMA has a lot on its plate at the moment, with some 200 separate RTS to be drafted, so timescales may be subject to variation, but, from conversations we're having with managers, it seems that most are looking at starting impact assessments for UCITS V in Q1 2015.
That doesn't mean firms won't be changing anything as a result of the directive though. We expect UCITS V will now start to impact AIFMD workstreams as firms seek to future proof the work they're doing on areas where there are crossover. The three main measures from UCITS V are depository liability (inherited from AIFMD), the remuneration rules (inherited from AIFMD) and the sanctions regime for firms that breach regulations. The introduction of a consistent sanctions and whistleblower regime across Europe shouldn't be underestimated. It should have a significant impact on the industry, reducing regulatory arbitrage and ensuring more consistency of behaviour across the industry, incentivised by the fairly sizeable 'stick' of a EUR15m fine.