European Union Updates

ESMA ESG Guidelines

On the 21^st August the European Securities and Markets Authority (ESMA) published the “Guidelines” on funds’ names using Environmental, Social and Governance (ESG) or sustainability-related terms on its website in all the official EU languages. Therefore, the Guidelines will apply from the 21st November 2024 for any new funds, exactly three months after the publication.

For existing funds, there will be a transitional period of six months after that date. Any new funds created after the application date will need to apply these “Guidelines” immediately.

For more information on the ESMA Guidelines you can read the report HERE

Solvency II

The FinDatEx working group updated the Solvency II Tripartite Template (TPT) in September. Key updates include:

• Enhanced descriptions for bonds with multiple maturity dates, featuring "expected maturity date" information.
• Updated description of infrastructure.
• Improved descriptions for loans with Payment in Kind (PIK) features.

This updated template version was open for public consultation until the 15th October 2024 with the finalised version due to be release before the end of 2024.

For further information about the Public Consultation on TPT V7 you can read more HERE

European Long-Term Investment Fund

The European Long-Term Investment Fund (ELTIF) II Level 2 regulatory technical standards (RTS) was published in the EU Journal on the 25^th October and now applies. Revised fund rules include the use of financial derivative instruments solely for hedging purposes, redemption policy, permitted liquidity management tools (LMT) and certain elements of the costs disclosure.

For more information, on the ELTIF publication is available you find out more HERE

PRIIPs Transaction Cost Methodology Change

A reminder that implicit transaction costs can be calculated using the methodology laid down in Annex VI (pt21) until the 31st December 2024. This means that the Arrival Price methodology must be used when calculating transaction costs starting January 1st, 2025.

Further guidance can be found in the ESMA Q&A for PRIIPs KIDS HERE

You can also read more about this in our insight Arrival price methodology takes shape ahead of deadline or discover how Broadridge has been supporting clients with this on our Portfolio Transaction Cost Calculations webpage.

United Kingdom Updates

Sustainability Disclosure Requirements

Since the introduction of the Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements (SDR Labels) on the 31st July, the uptake has reportedly been slower than the FCA has expected. On the 9th Sept, the FCA announced that it is offering limited “temporary flexibility” to the “naming and marketing rules” until the 2nd April 2025 deadline to help firms comply with the SDR rules. You can read the FCA’s announcement HERE.

The FCA also announced it will also postpone the SDR for Portfolio Management implementation until quarter two of 2025. For further information about this you can read the FCA’s announcement HERE

Closed-ended UK-listed Investment Funds and Trusts

The UK Government and the FCA have published a statement on reforms to retail disclosure requirements, temporarily exempting investment trusts from the current Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation. It remains to be seen whether platforms will be able to accommodate funds that do not provide a PRIIPs Key Information Document (KID) or costs information.

In its update, the FCA reiterated the Consumer Duty requirements to ensure communications are fair, clear and not misleading.

You can also read more about the FCA statement HERE

Overseas Fund Regime

The FCA has published information relating to the Overseas Funds Regime (OFR) assisting funds with registering and understanding the OFR application process. From the start of September, funds were eligible to join the UK's OFR.

The FCA provided additional guidance in September by releasing its approach to recognising funds under OFR. The approach document details the necessary information for applications and post-application outcomes, whether approved or denied.

Details on the Connect OFR Registration User Guide can be found HERE

The FCA’s approach to recognition of funds under the OFR is available HERE

The Central Bank of Ireland’s (CBI) guidelines can be viewed HERE. Asset managers can find their landing slot dates on the Fund Collective HERE

Key Dates

Consumer Composite Investments

The UK’s new retail disclosure regime is expected to be in place in H1 2025, subject to Parliamentary approval and the FCA consultation process. The FCA have confirmed they will release a Policy Paper in H1 2025 and a consultation paper in November 2024 around proposed new rules for the CCI regime.

For more information, the details are available HERE

Broadridge Fund Communication Solutions

We hope that these updates have been helpful. We aim to simplify the challenges of the investment industry by delivering client-centric expertise, services and products that address the ever-changing requirements of financial regulation.

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