The move to converge remuneration rules, which have been described as the most politically sensitive area of the Ucits V Directive, will potentially please those in the funds industry who contend with overlapping regulations.
Last week, European regulators moved to bring more convergence between Europe’s alternative and traditional funds.
The proposed European Securities and Markets Authority (Esma) guidelines on remuneration, which are now under consultation, will lead to a “level playing field in the fund sector”, said Steven Maijidoor, chair of the authority.
The guidelines – which fall under the Ucits V directive – overlap with remuneration rules in the Alternative Investment Fund Managers Directive (AIFMD), though acknowledge differences between the two.
Esma also said that in developing these guidelines, the regulator co-operated with the European Banking Authority with the objective of aligning guidance on remuneration policies across financial sectors.
At a Funds Europe Ucits V roundtable earlier this year, Liz Moxham (pictured), senior compliance manager at Aberdeen Asset Management, said: “The biggest challenge we have found is all the other remuneration issues that come with MiFID II, CRD IV and AIFMD.”
In light of those regulations – namely the updated Markets in Financial Instruments Directive and the Capital Requirements Directive IV, along with the AIFMD – Moxham added: “Ideally we need a global-type remuneration directive, so our challenge is probably to align the directives to have a global policy.”
Her views were reflected by Andrew Holding, head of fund services at F&C Asset Management, who said one process was needed, and added: “This is clearly the most politically sensitive part of the directive and other directives that are coming through.”
Key elements of the guidelines include proposals on how different rules, such as those set out in the AIFMD and in the CRD IV, should apply where employees or other personnel might perform services subject to remuneration principles in more than one set of regulations.
ESMA aims to publish a final report by the first quarter of 2016 ahead of the transposition deadline for Ucits V Directive, which is March 18, 2016. The final report is expected to also include revised AIFMD Remuneration Guidelines as proposed in the consultation paper.
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