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News article20 July 2023Directorate-General for Financial Stability, Financial Services and Capital Markets Union1 min read

Commission welcomes political agreement on enhanced regulatory framework for investment funds

The Commission welcomes the political agreement reached last night between the European Parliament and the Council on the Commission's proposal to improve the regulatory framework applicable to the EU investment funds industry, which the Commission adopted as part of the capital markets union (CMU) package of 25 November 2021. The reform is amending both the Directive on Undertaking for Collective Investment in Transferable Securities (UCITS), and the Alternative Investment Fund Managers Directive (AIFMD). It covers funds that are easily accessible to retail investors and those which are designed primarily for professional investors, such as private equity and hedge funds.

The revised regime harmonises the rules governing liquidity management tools, in line with international recommendations to support financial stability. It also increases transparency on the so-called “delegation rules”, by ensuring that supervisors are well-informed about the extent to which fund managers rely on expertise from third parties. Furthermore, the new rules establish a harmonised framework for funds that originate loans especially to companies in the EU, offering new funding opportunities to the real economy while safeguarding investor protection.

Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “Yesterday’s achievement is another important step towards delivering on the capital markets union. The reform will better integrate the market for alternative investment funds, improve access to additional sources of financing for the European economy, and strengthen investor protection. This reform, and in particular the new framework on liquidity management tools, will also improve the resilience of investment funds and the management of financial stability risks. I wish to sincerely congratulate the team of the Presidency of the Council as well as the team of the European Parliament under the leadership of the Rapporteur, for a successful negotiation”.