Changes from plenary report to adopted text

Removed- employed by or committed to the management company for monitoring and controlling the delegate;

Removed(iii) information on the function delegated, the type of delegation (full or partial), and the date of the delegation agreement or contract;

Removed(iv) where sub-delegation arrangements are in place, the same information in respect of the sub-delegates and the functions sub-delegated;

Removed(v) the date of conclusion and expiration of the delegation and sub-delegation arrangements;

Removed(vi) confirmation that the management company has implemented periodic due diligence measures to oversee, monitor and control the delegate, and kept records of issues identified and, where relevant, the measures adopted to address those issues.

Removed1b. The ECB and national authorities shall grant ESMA access to data on assets and liabilities (fund inventories) of UCITS funds provided by fund managers pursuant to Regulation (EU) No 1073/2013.

Removed1c. A management company shall, for each of the UCITS it manages, provide the following to the competent authorities of its home Member State:

Removed(a) if relevant, information on tools used for managing the liquidity of the UCITS according to Article 84(2);

Removed(b) the current risk profile of the UCITS and the risk management systems employed by the management company to manage the market risk, liquidity risk, counterparty risk and other risks including operational risk;

Removed(c) the results of stress tests performed.

Removed2. ESMA shall develop draft regulatory technical standards specifying the details to be reported in accordance with paragraphs 1, 1a and 1c of this Article. ESMA shall take into account other reporting requirements to which the management companies are subject and the report issued in accordance with Article 20b. Regulatory technical standards shall set out the appropriate level of standardisation of the information to be reported.

RemovedESMA shall submit those draft regulatory technical standards to the Commission by [Please insert date = 36 months after the entry into force of this Directive].

RemovedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

Removed2a. Where necessary for the effective monitoring of systemic risk, the competent authorities of the home Member State may require additional reporting to that described in paragraph 1, on a periodic or on an ad-hoc basis. The competent authorities shall inform ESMA about the additional reporting requirements.

RemovedIn exceptional circumstances and where required in order to ensure the stability and integrity of the financial system, ESMA after consulting the ESRB may request the competent authorities of the home Member State to impose additional reporting requirements.

Removed3. ESMA shall develop draft implementing technical standards specifying:

Removed(a) the format and data standards for the reports referred to in paragraphs 1, 1a and 1c of this Article which shall include in particular relevant legal identifiers;

Removed(b) the reporting frequency and timing;

Removed(ba) methods and arrangements for submitting the reports referred to in paragraphs 1 and 1a, including methods and arrangements to improve data standardisation and efficient sharing and use of data already reported within any Union reporting framework by any relevant competent authority, at Union or national level.

RemovedWhen developing those draft technical standards, ESMA shall take into account international developments and standards agreed at Union or global level and the findings of the report issued in accordance with Article 20b.

RemovedESMA shall submit those draft implementing technical standards to the Commission by [Please insert date = 36 months after the entry into force of this Directive].

RemovedPower is delegated to the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

Removed3a. The competent authorities of the home Member State of the UCITS management company shall ensure that all information gathered in accordance with paragraphs 1, 1a, 1c and 2a in respect of all UCITS management companies that they supervise is made available to competent authorities of other relevant Member States, ESMA and the ESRB by means of the procedures set out in Article 101 on supervisory cooperation.

Removed1. By [Please insert date = 24 months after the entry into force of this Directive], ESMA shall submit to the Commission a report for the development of an integrated supervisory data collection, which shall focus on how to:

Removed(a) reduce areas of duplications and inconsistencies between the reporting frameworks in the asset management sector and other sectors of the financial industry and

Removed(b) improve data standardisation and efficient sharing and use of data already reported within any Union reporting framework by any relevant competent authority, at Union or national level.

Removed(ba) improve the cost-benefit balance of the burden of information collection for the overall benefit of UCITS and of investors;

RemovedIn that report, ESMA shall also provide detailed comparison and best practices of data collection in the Union with world leading markets for retail investment funds and the impact of data collection on competitiveness.

Removed2. When preparing the report referred to in paragraph 1, ESMA shall work in close cooperation with the European Central Bank (ECB), the other European Supervisory Authorities, and, where relevant, the national competent authorities.’;

Removed(6) Article 22a is amended as follows:

Removed(a) in paragraph 2, point (c) is replaced by the following:

Removed‘(c) the depositary has exercised all due skill, care and diligence in the selection and the appointment of any third party to whom it intends to delegate parts of its tasks, except where that third party is a central securities depository acting in the capacity of an issuer CSD as defined in ▌the delegated act adopted on the basis of Articles 29(3) and 48(10) of Regulation (EU) No 909/2014 and continues to exercise all due skill, care and diligence in the periodic review and ongoing monitoring of any third party to which it has delegated parts of its tasks and of the arrangements of the third party in respect of the matters delegated to it.;

Removed(b) paragraph 4 is replaced by the following:

Removed‘4. For the purposes of this paragraph, the provision of services by a central securities depository acting in the capacity of an issuer CSD as defined in ▌the delegated act adopted on the basis of Articles 29(3) and 48(10) of Regulation (EU) No 909/2014 shall not be considered a delegation of the depositary’s custody functions.

RemovedFor the purposes of this paragraph, the provision of services by a central securities depositary acting in the capacity of an investor CSD as defined in Article 1, point (f), of Commission Delegated Regulation (EU) 2017/392 shall be considered a delegation of the depositary’s custody functions.’;

Removed(7) in Article 29(1), point (b) is replaced by the following:

Removed‘(b) the directors of the investment company must be of sufficiently good repute and be sufficiently experienced also in relation to the type of business pursued by the investment company and, to that end: the names of the directors and of every person succeeding them in office must be communicated forthwith to the competent authorities; the conduct of an investment company’s business must be decided by at least either two full-time employees or two ▌persons committed full-time or on a full-time equivalent basis to conduct the business of that management company and resident in the Union’ meeting such conditions; and ‘directors’ shall mean those persons who, under the law or the instruments of incorporation, represent the investment company, or who effectively determine the policy of the company;

Removed(ba) the investment company must ensure that at least one member of its governing body is a non-executive director. The investment company, in appointing a non-executive director of its governing body, must determine whether such a member is independent in character and judgement and whether there are relationships or circumstances, which are likely to affect that member’s judgement. The investment company must take reasonable steps to ensure that any non-executive directors appointed to its governing body have sufficient expertise and experience to be able to make judgements on whether the investment company is managing UCITS in the best interest of investors. Non-executive directors shall contribute to ensuring that the investment company complies with the requirements regarding conflicts of interests and is acting in the best interests of the UCITS and their investors, as specified in this Directive’;

Removed(7a) in Article 57, the following paragraph is added:

Removed2a. Where the UCITS management company implements side pockets referred to in Article 84(2)(a) by means of assets segregation, the segregated assets can be excluded from the calculation of limits laid down in this Chapter.

Removed(8) in Article 84, paragraphs 2 and 3 are replaced by the following:

Removed‘2. By way of derogation from paragraph 1:

Removed(a) a UCITS may, in the interest of its unit-holders, temporarily suspend the repurchase or redemption of its units or activate other liquidity management tool selected in accordance with Article 18a(2). In the interest of its unit-holders and to ensure subscriptions and redemptions are processed at a fair price, a UCITS may also activate side pockets as referred to in Annex IIA, point 8, when the UCITS cannot ensure the fair and accurate valuation of some assets or where some assets have become non-tradable;

Removed(b) in the interest of the unit-holders or of the public, in exceptional circumstances and after consulting the UCITS, competent authorities of a UCITS home Member State may require a UCITS to activate a liquidity management tool referred to in points 1 or 2 of Annex IIA▌, whichever is more suitable considering the type of UCITS and the risks that necessitate taking this measure.

RemovedThe temporary suspension referred to in point (a) of the first subparagraph shall be provided for only in exceptional cases where circumstances so require and where suspension is justified having regard to the interests of the unit-holders.

Removed3. The UCITS shall▌, without delay, notify the competent authorities of ▌its home Member State and the competent authorities of all Member States in which it markets its units, in any of the following circumstances:

Removed- when, in situations of liquidity stress, a UCITS activates or deactivates one of the liquidity management tools listed in points 1 to 2 of Annex IIa

Removed- when activating or deactivating side pockets as referred to in point 8 of Annex IIa,

Removed- when activating or deactivating any other liquidity management tool in a manner that is not in the ordinary course of business as envisaged in the fund documentation.

RemovedThe competent authorities of the home Member State of the UCITS shall inform, without delay, ESMA ▌about any notification received in accordance with this paragraph. The competent authorities of the home Member State of the UCITS shall inform ESRB if there is any potential risk to stability and integrity of financial system.

RemovedESMA shall have the power to share the information received in accordance with this paragraph with competent authorities.

Removed3a.The competent authorities of the UCITS home Member State shall notify the competent authorities of all Member States in which the UCITS markets its units, ESMA ▌prior to exercising powers pursuant to paragraph 2, point (b). The competent authorities of the home Member State of the UCITS shall inform ESRB if there is any potential risk to stability and integrity of financial system.

Removed3b. The competent authority of the Member States in which a UCITS markets its units may request the competent authority of the UCITS home Member State to exercise powers laid down in paragraph 2, point (b), specifying the reasons for the request and notifying ESMA and, in case of any potential risk to the stability and integrity of the financial system, the ESRB thereof.

Removed3c. Where the competent authority of the UCITS home Member State does not agree with the request referred to in paragraph 3b, it shall inform the requesting competent authority, ESMA and, in case of any potential risk to the stability and integrity of the financial system, the ESRB thereof, stating the reasons for the disagreement.

Removed3d. On the basis of the information received in accordance with paragraphs 3b and 3c, ESMA shall issue an opinion to the competent authorities of the UCITS home Member State on exercising powers laid down in paragraph 2, point (b).

Removed3e. Where the competent authority does not act in accordance or does not intend to comply with ESMA’s opinion referred to in paragraph 3d, it shall inform ESMA, stating the reasons for the non-compliance or intention. In the event of a serious threat to investor protection, a threat to the orderly functioning and integrity of financial markets or a risk to the stability of the whole or part of the financial system in the Union, and unless such publication is in conflict with the legitimate interest of the share or unit-holders or of the public, ESMA may publish the fact that a competent authority does not comply or intend to comply with its advice together with the reasons stated by the competent authority for the non-compliance or intention. ESMA shall give the competent authorities advance notice about such publication.’

Removed3f. ESMA shall develop draft regulatory technical standards indicating in which situations the competent authorities may exercise the powers set out in paragraph 2, point (b). When developing those standards, ESMA shall consider the potential implications of such supervisory intervention for investor protection and the financial stability in another Member State or in the Union. Those standards shall recognise that the primary responsibility for liquidity risk management remains with the UCITS and that intervention by the competent authorities is a last resort.

RemovedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.’;

Removed(9) in Article 98, the following paragraphs are added:

Removed‘3. The competent authority of the UCITS host Member State may, where it has good reasons to suspect that acts contrary to this Directive are being or have been carried out by the UCITS, request the competent authority of the UCITS home Member State to exercise, without delay, powers laid down in paragraph 2 specifying the reasons for its request in as specific a manner as possible and notifying ESMA and, if there are potential risks to the stability and integrity of the financial system, the ESRB thereof.