Module Application
Does the investment firm meet ongoing operating conditions and prudential requirements in
accordance with EU directives and Member State legislation?
Does the investment firm implement appropriate risk management practices, protect
investors, and adhere to prescribed investment restrictions for specific fund types such as
UCITS, AIFs, ELTIFs, MMFs, EuVECAs, and EuSEFs?
Does the investment firm prepare and publish compliant prospectuses, meet reporting
obligations to authorities, and provide required disclosures to investors?
Does the investment firm comply with specific requirements related to short selling,
securities financing transactions, and the marketing of regulated fund types?
Module Scope
The European Union (EU) has established a comprehensive regulatory framework for asset
management to ensure investor protection, market stability, and the creation of a harmonised
EU-wide market for investment services. This framework applies to investment firms engaged
in asset management activities across the 27 EU Member States.
The EU Asset Management module outlines the compliance obligations for investment firms
operating in the EU asset management industry. It covers the requirements set forth in key
EU directives and regulations, including MiFID II, IFR/IFD, UCITS Directive, AIFMD, ELTIF
Regulation, and other relevant instruments. While Member States transpose these directives
into national law, this module focuses on the baseline requirements that apply across the EU.
The EU Asset Management module encompasses a range of legislative resources including:
Markets in financial instruments directive (MIFID ii)
Markets in financial instruments regulation (MiFIR)
Undertakings for collective investment in transferable securities (UCITS) directive
Alternative investment fund managers directive (AIFMD)
Investment firms regulation and directive (IFR/IFD)
European long term investment fund regulation (ELTIF)
Short selling and certain aspects of credit default swaps regulation
Money market fund regulation (MMF)
Transparency of securities financing transactions and of reuse regulation
European venture capital funds regulation (EuVECA)
European social entrepreneurship funds regulation (EuSEF)
Module Scope and Application Document
The Clear Path to Compliance EU Asset Management 2
Investment firms must navigate a complex regulatory landscape that encompasses various
aspects of their operations, including:
Authorisation and operating conditions: Investment firms must obtain and maintain
appropriate authorisations, meeting ongoing requirements related to legal form,
capital, organisational arrangements, and management.
Prudential requirements: Firms must adhere to prescribed own funds, capital, and
liquidity requirements, which vary based on the firm's classification under IFR/IFD.
Risk management: Investment firms are required to implement robust risk
management practices, including the establishment of dedicated risk management
functions for certain fund types.
Investor protection: Firms must ensure fair treatment of investors, provide clear and
non-misleading communications, and adhere to specific conduct rules.
Fund-specific requirements: The module covers unique restrictions and
requirements for various fund types, including UCITS, AIFs, ELTIFs, MMFs, EuVECAs,
and EuSEFs. These encompass investment policies, asset allocation, diversification,
and specific operational rules.
Reporting and disclosure: Investment firms must meet regular reporting obligations
to competent authorities and provide prescribed disclosures to investors.
Prospectus requirements: Firms must prepare and publish compliant prospectuses
when offering securities to the public or seeking admission to trading on regulated
markets.
Short selling and securities financing transactions: The module addresses specific
obligations related to these activities, including position calculation, reporting, and
collateral management.
By adhering to these regulatory requirements, investment firms can ensure compliance with
EU asset management regulations, protect investors, and contribute to the stability and
integrity of the European financial markets. Non-compliance may result in significant
consequences, including regulatory sanctions, financial penalties, reputational damage, and
potential criminal charges for unauthorised activities.
This module serves as a comprehensive guide for investment firms to understand and
implement the necessary measures to meet their regulatory obligations in the EU asset
management landscape.