The Commission de Surveillance du Secteur Financier (CSSF) informs investment funds that either qualify as undertakings for collective investment in transferable securities (UCITS) or alternative investment funds (AIFs) and their investment fund managers (IFMs), including self-managed UCITS and internally managed AIFs, that on 4 June 2020 the European Securities and Markets Authority (ESMA) published a supervisory briefing on the supervision by national competent authorities (NCAs) of costs applicable to UCITS and AIFs. Such briefing comes in response to the need to improve convergence across NCAs in the approach to undue costs.
To reduce the risk of regulatory arbitrage and ensure equal levels of investor protection throughout the EU, the supervisory briefing focuses on how NCAs supervise the relevant cost-related provisions under UCITS Directive 2009/65/EC and AIFM Directive 2011/61/EU (AIFMD) and on the IFMs’ obligation to prevent undue costs being charged to investors.
The supervisory briefing, in addition to being addressed to NCAs, is also aimed at providing IFMs, UCITS and AIFs with indications of NCAs’ expectations and compliant practices regarding the cost-related provisions of the UCITS Directive and AIFMD frameworks.
ESMA’s press release and supervisory briefing can be found on ESMA’s website under the following links:
- ESMA’s press release from 4 June 2020 on the publication of a supervisory briefing on the supervision of costs in UCITS and AIFs:
- ESMA’s supervisory briefing on the supervision of costs in UCITS and AIFs dated 4 June 2020:
In this context, the CSSF would like to draw the IFMs’ particular attention to sections 3 and 4 of the supervisory briefing which contain criteria in order to assess the notion of undue costs and to supervise the obligation to prevent undue costs being charged to investors in UCITS and AIFs, notably through a requirement to put in place a structured pricing process that takes into account the requirements defined under section 3.