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To explain two papers published by the European Securities and Marketing Authority (ESMA) covering the application of the mar-keting “passport” under the Alternative Investment Fund Managers Directive (AIFMD).

Explains ESMA’s first paper, containing an advice to the European Parliament, Council and Commission (collectively the Trilogue) on the potential application of the AIFMD passport to non-EU Alternative Investment Fund Managers (AIFMs) and Alternative in-vestment Funds (AIFs), and a second paper, containing ESMA’s opinion on the current functioning of the AIFMD (currently used by EU AIFMs marketing EU AIFs in the EU) and National Private Placement Regimes (NPPRs, used for marketing by non-EU AIFMs and non-EU AIFs).

The ESMA papers were disappointing because they gave far less guidance and encouragement than anticipated that AIFs located in major jurisdictions such as the US and the Cayman Islands will be any easier to market to EU professional investors in the near future.

AIFMs (both inside and outside the EU) who are already using, or intending to use, the NPPRs should take some comfort that it seems highly unlikely that these regimes will be removed in the near future.

Practical guidance from experienced financial services lawyers.

This study investigates how the interrelated elements of organizational roles – activities, motives, resources and relationships – are mobilized to construct a code of conduct for the proxy advisory (PA) industry in Europe.

This qualitative study uses archival documents from three consecutive regulatory consultations and 16 interviews with key stakeholders. It analyzes how different stakeholder groups (i.e. PA firms, investors, issuers and the regulator) perceive and mobilize the elements of PA firms’ role to construct the accountability regime’s boundaries (accountability problem and action, and users and providers of accounts).

This study shows how PA firms, investors, issuers and the regulator refer to the perceived motives behind PA firms’ activities to construct an accountability problem. The regulator accepted the motives of an information intermediary for PA firms’ role and required PA firms to develop a corresponding accountability action: a code of conduct. PA firms involved in developing the code of conduct formalized who is accountable to whom by aligning this accepted motive with their activities, relationships, and resources into a common role.

The study highlights how aligning role elements to reflect PA firms’ common roles enables the construction of an accountability regime that stakeholders accept as a means of regulation. Analyzing the role elements offers insights into the development and functioning of accountability regimes that rely on self-regulation. We also highlight the role of smaller regional firms in helping shape transnational accountability regimes.

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs) Regulation for all EU Member States and gives National Competent Authorities (NCAs), European Securities and Markets Authority (ESMA), and European Banking Authority (EBA) powers to monitor financial products (and services) under their supervision and to “temporarily” prohibit or restrict the marketing, distribution, or sale of certain financial instruments, or to intervene in relation to certain financial activities or practice. This extends the supervisory measures defined in MiFID II to any PRIIPs (including insurance-based investment products “IBI products”) that would not otherwise fall under the scope of MiFID II. Product intervention power is given to the NCAs, and in order to use power, it requires to take the specifics of the individual case into account and a series of conditions, criteria, and factors to fulfill. Moreover, ESMA and the EBA have a type of control function and ability to override national regulators on product. The aim of product intervention powers is to ensure strengthening of investor protection, but given the potential significant impact of this power, calls into question of possibility to delay innovation and slow down product developments on the capital market.

This paper provided an overview of supervisory measures on product intervention, that is, scope of the product intervention power, criteria, factors, and risks which have to be taken into consideration when using this regulator’s tool.

To summarize and analyse four opinions issued in May and July 2017 by the European Securities and Markets Authority (“ESMA”) concerning regulatory and supervisory arbitrage risks that arise as a result of increased requests from financial market participants to relocate activities and functions in the EU27 following the UK’s decision to withdraw from the EU, and the expected regulatory response to those risks.

Discusses the possible relocation of financial firms, activities and functions following the UK’s decision to withdraw from EU; the resulting cross-sectoral regulatory and supervisory arbitrage risks that ESMA foresees; nine principles that ESMA enumerates to guide its regulatory response to those risks; some common themes that emerge from ESMA’s July Opinions; and the implications for UK firms and trading venues seeking to establish a presence in the EU 27.

ESMA foresees regulatory and arbitrage risks in Brexit and a potential “race to the bottom” as certain national regulators jostle for and grab UK market share.

UK firms and trading venues seeking to establish a presence in the EU27 from which to operate will need to give detailed consideration and focus to the resources and operational substance which will need to be located in the jurisdiction in which that presence is established.

Practical guidance from experienced financial services, securities and fund management lawyers.

To explain the practices that ESMA (European Securities and Markets Authority) recommends for investment firms and national competent authorities to implement when it comes to structured retail products (SRPs), in order to ensure sound product governance arrangements and the consistency of supervisory practices needed for adequate investor protection across the European Union.

Lists the ESMA guidelines for the general organization of product governance arrangements, breaks down the aspects manufacturers should consider in the making of their SRPs, highlights the need to understand the target market, explains the appropriate structure of the distributor’s and manufacturer’s distribution strategy, details how manufacturers establish a SRP’s value, recommends how investment firms deal with SRPs on the secondary market, and explains how manufacturers review the performance of their SRPs.

The competent authorities are still focusing on improving and enforcing investor protection. This ESMA opinion is just one example of how product governance structures and arrangements should be developed and implemented by everyone involved. It will be important to attend carefully to what MiFID 2 (Markets in Financial Instruments Directive 2) product governance requirements bring regarding investor protection in addition to the described ESMA opinion, which is based on MiFID 1.

Practical guidance from experienced finance lawyers.

This paper aims to conceptualize and empirically illustrate the challenges that financial market regulation presents to politicians and the organization tasked with specifying regulations and supervising their implementation in the interest of users and consumers of financial instruments. It analyses the problem from the viewpoint of the governor's dilemma and the control/competence conflict, the linked problem of the rent-seeking of agents/intermediators and consumers of financial instruments. Political accountability problems are enhanced by the materiality of the technologies used, i.e. algo trading.

The paper theoretically conceptualizes and empirically illustrates the argument.

The paper finds that regulators of digitalized financial markets are faced with considerable problems and depend on private agents when regulating financial transactions. However, the new technological instruments also offer new possibilities for securing compliance.

Further research should focus more in-depth on the cooperation between public and private actors in the specification and implementation of regulatory details. It should further investigate the conditions which allow regulators to use RegTech in the surveillance of financial firms.

Since financial market transactions are opaque for most users, the creation of more transparency is crucial to hold regulators accountable in their activity of surveillance of financial firms. New algorithm-based technologies may lend important support in doing so.

By linking the different analytical perspectives, i.e. the governor's dilemma vis-à-vis the intermediator or agent and the possible rent-seeking of intermediators, under the condition of a highly developed technology of financial transactions as well as the market structure, the paper offers new insights into the limits as well as new opportunities of regulating financial markets allowing for political accountability of regulators and financial firms.

This article aims to outline in depth the European Commission's adopted implementing rules (the Regulation) for the Directive on Alternative Investment Fund Managers. These new regulations have been eagerly awaited by private equity fund managers and their investors who have been seeking a measure of certainty about how the AIFMD will be transposed into local law.

This piece summarizes some of the key points of the Regulation.

This article addresses the rules in the Regulation concerning: the calculations of assets under management; capital requirements in relation to professional liability risks applicable to alternative investment fund managers; operating conditions for alternative investment fund managers, including liquidity management, organizational requirements and rules on valuation; conditions for delegation; rules on depositaries, including the depositary's tasks and liability; transparency, reporting and disclosure requirements; and rules for cooperation arrangements.

The Regulation supplements certain elements of the Directive and contains implementing rules that will have direct effect in EU member states on application without the need for national implementing legislation. By discussing some of the highlights of the Regulation, the article will help fund managers and investors gain a better perspective of the AIFMD, which is useful from both a compliance and business planning standpoint.

This piece is of value to those private equity fund managers and investors looking for guidance as to how to digest the Regulation and the implications of these new measures on their respective businesses, as well as the investment marketplace as a whole moving forward.

This paper aims to discuss key concerns surrounding the recent implementation of the Markets in Financial Instruments Directive (MIFID II). It focuses on the UK regime. The insights derived are envisaged to be helpful guides for participants and regulators in financial markets.

This paper used the legal-economics perspective. It relied on primary data from statutes and regulations and secondary data from the public domain to analyze the phenomenon. The analytical framework comprised the following sections: Introduction, MiFID I review, MiFID II scope, MiFID II key concerns and concluding remarks.

Only half of the EU Member States including the UK managed to transpose MiFID II within the 3rd January 2018 effective date. At this early stage of implementation, various teething problems were encountered. These pertained to costs and charges reporting, firm governance, product governance, transaction reporting, best execution and research. Owing to the sheer scale and complexity of MIFID II, most entities barely coped with their reporting obligations. Noting the situation, the Financial Conduct Authority assured firms taking all sufficient steps that they would be treated fairly.

The paper was not sufficiently empirical. However, the study benefited reasonably from triangulation of data and perspectives to provide good insights on the implementation effects of the complex and voluminous EU rules for governing financial markets with global implications.

Investors could gain from the enhanced transparency and best execution rules. Investment banks could gain from the emerging resilient, integrated and efficient financial markets. Regulators with better access to more and higher quality reporting could intervene more effectively when required.

This paper assembled and critically analyzed currently available research insights in these areas so as to provide useful guidance to those needing to work and comply with MiFID II rules and academics teaching financial services law.

This paper investigates the impact of moving Central Counterparty Clearing Houses (CCPs) that clear euro-denominated transactions to the Eurozone after the withdrawal of the UK from the European Union. Prior to Brexit, the City of London had a dominant position in euro-clearing, but in the aftermath of Brexit, clearing houses might decide to move to the EU27. This paper aims to investigate the impact of moving euro-clearing to the EU27.

This paper provides an economic, political and legal investigation based on desk research. It studies the relevant materials, as they relate to the functioning of Central Counterparty Clearing in the aftermath of Brexit, with specific attention to the potential shift of locations and oversight.

The development of a EU27 financial hub and the possibility to increase oversight over euro-denominated financial transactions, which were partly at the roots of the financial and Eurozone crisis, could strengthen the market shaping of European financial markets. However, localizing euro-denominated transactions in Europe could potentially give rise to efficiency losses and a higher risk for companies and investors. Furthermore, the European regulatory framework currently faces certain weaknesses, obstructing the regulatory potential of the EU.

As the Brexit negotiations are not yet finished, this paper does not intend to set out a definite outcome of the processes currently taking place.

Shifting locations and oversight of CCPs as a result of Brexit could lead to the establishment of a large financial centre within the EU-27. At the same time, it is to be expected that such a development will have a significant impact on the financial infrastructure of the City of London.

There exists an important trade-off with regard to shifting locations that need to be at the forefront of the discussions and the negotiations when dealing with Brexit. This seems to be neglected in a lot of the current policy debates. This paper takes stock of the ongoing debate and how it relates to the functioning of CCPs.