The European Systemic Risk Board (ESRB) has published a letter sent to members of the European Parliament on the subject of the  European Commission’s proposed amendments to the Directive on Alternative Investment Fund Managers (AIFMD) and the Directive on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS).

While largely welcoming the Commission's proposals, in particular as they pertain to increased availability of liquidity management tools for fund managers, the ESRB has suggested the following amendments:

1. Addressing liquidity mismatches in open-ended AIFs: ESRB proposes that ESMA be given the power to draw up a list of inherently less liquid assets.  Managers of open-ended AIFs investing in such assets are to be required to demonstrate that they can follow their investment strategy in all foreseeable market conditions.

2. Access to data for monitoring systemic risk:  ESRB proposes establishing datasharing arrangements, as well as high-frequency reporting in crisis situations, for the benefit of all authorities with macroprudential mandates (including the ESRB).

3. More guidance on the use of macroprudential leverage limits: ESRB calls for further clarification regarding the operationalisation of leverage limits.

If you have any questions or comments, please contact Yasmin Bou Hamze.