Advocacy is an extremely important part of the Association’s work, and since the start of 2021, ISLA has responded to a number of key consultations on behalf of its member firms across the region.
The European Commission’s ‘Targeted Consultation on the review of regulation, on improving securities settlement in the European Union and on central securities depositories’
CSDR plays a pivotal role in the post-trade harmonisation efforts in the EU, enhancing the legal and operational conditions in particular for cross-border settlement in the Union, while promoting cross-border competition within the single market. The review considers a wide range of specific areas where targeted action may be necessary to ensure the fulfilment of the objectives of CSDR in a more proportionate, efficient and effective manner. The Commission 2021 Work Programme and the 2020 Capital Markets Union Action Plan announced the Commission’s intention to come forward with a legislative proposal, to simplify CSDR and contribute to the development of a more integrated post-trading landscape in the EU.
ISLA’s CSDR Working Group has reviewed and responded to sections relating to internalised settlement, the scope of application of certain requirements under CSDR, and the settlement discipline regime. ISLA’s key theme throughout the response, is to convey the importance of securities lending and borrowing to market liquidity. In our response, we highlight industry concerns around the scope of the mandatory buy-in regime and its application to SFTs and the timing around implementation of Article 25.
Alternative Investment Fund Managers Directive (AIFMD)
The European Commission has published its consultation on the review of EU rules on AIFMD.
On 10 June 2020, the European Commission submitted its report to the European Parliament and the Council on the scope and the application of the AIFMD. The report concludes that while the AIFMD has contributed to the creation of the EU AIF market, provided a high-level protection to investors and facilitated monitoring of risks to financial stability, there are a number of areas where the legal framework could be improved. This consultation seeks the views of stakeholders on how to achieve a more effective and efficient functioning of the EU AIF market as part of the overall financial system.
ISLA’s Collateral Management Steering Group drafted responses to Section 2 – Investor protection, questions relating to Tri-party Collateral Managers.
European Long Term Investment Funds (ELTIF)
The European Commission’s public consultation on the review of the ELTIF framework.
In June 2020, the High Level Forum on the Capital Markets Union made a set of specific recommendations calling for a review of the ELTIF regulation, broadening the scope of eligible assets and reducing potential barriers to investment.
The current regulation advises that ELTIFs may not partake in the short selling of assets and may not enter in securities lending/ borrowing transactions or any other agreement, that have an equivalent economic effect if more than 10% of the assets of the ELTIF are affected.
ISLA’s ESG Steering Group respond to questions focusing on the expansion of eligible activities for these particular funds, to encourage growth in the EU, by lifting the limitations around securities lending activity.
The EU Expected Developments Roadmap on the ISLA website has also been recently updated. The ‘EU Developments Roadmap’ looks at the key legislative and policy initiatives and priorities for the European Commission (EC) over the coming two to three years.
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