The ESMA has recently provided an update on its guidelines concerning ESG and sustainability-related terms in fund names, impacting the FinTech sector, especially in sustainable and ethical investments.
A key aspect of this update is the decision to postpone the adoption of these guidelines. ESMA has opted for this delay to fully integrate the outcomes of reviews of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. The provisional agreement from interinstitutional negotiations has assigned new mandates to ESMA, including developing guidelines for situations where the name of an Alternative Investment Fund (AIF) or UCITS is unclear, unfair, or misleading.
The guidelines are anticipated to be approved and published in the second quarter of 2024, contingent on the finalization of AIFMD and UCITS Directive revisions. Once published, these guidelines will become applicable three months later in all official EU languages. Fund managers, particularly those launching new funds, need to be aware of compliance requirements. New funds are expected to comply from the application date, while managers of existing funds have a six-month window from the application date to ensure compliance.
An ESMA spokesperson emphasized, “ESMA’s decision to postpone the adoption of the Guidelines is crucial for ensuring comprehensive and effective regulations in the ever-evolving FinTech landscape. Our aim is to provide clarity and fairness in fund naming, particularly in the areas of ESG and sustainability.”
By FCCT Editorial Team
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