The ESMA has recently announced an update regarding its guidelines on ESG and sustainability-related terms in fund names.
This update is significant for the FinTech sector, particularly in the areas of sustainable and ethical investments.
A critical aspect of this update is the postponement of the adoption of these guidelines. ESMA has chosen to delay the implementation to fully incorporate the outcomes of the reviews of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. Notably, the provisional agreement from the interinstitutional negotiations has introduced new mandates for ESMA. These include developing guidelines to address situations where the name of an Alternative Investment Fund (AIF) or UCITS is unclear, unfair, or misleading.
The guidelines are now expected to be approved and published in the second quarter of 2024, subject to the finalisation of the AIFMD and UCITS Directive revisions. Once published, these guidelines will be applicable three months after their publication on the website in all official EU languages. It is important for fund managers, especially those launching new funds, to be aware of the compliance requirements. New funds will be expected to comply with these guidelines from the date of their application, while managers of existing funds will have a six-month period from the application date to ensure compliance.
“ESMA’s decision to postpone the adoption of the Guidelines is crucial for ensuring comprehensive and effective regulations in the ever-evolving FinTech landscape,” said ESMA spokesperson. “Our aim is to provide clarity and fairness in fund naming, particularly in the areas of ESG and sustainability.”
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