Requiring a standardised disclosure template would deter investment and hinder EU economic competitiveness
Brussels, Belgium — MFA encouraged the European Securities and Markets Authority (ESMA) to adopt a principles-based approach to disclosure requirements for private securitisations in a letter today. The letter responds to ESMA’s consultation proposing a simplified disclosure template for private securitisations. The European Commission is expected to undertake broader securitisation reforms later this year.
“Prescriptive and duplicative disclosure rules for private securitisations will harm EU economic competitiveness and the development of securitisation markets in Europe,” said Jillien Flores, MFA Chief Advocacy Officer. “A principles-based approach to securitisation disclosures aligns with the Savings and Investments Union and will protect investors, enhance the attractiveness of European securitisations, and attract global capital into EU markets.”
In the letter, MFA supports efforts to enhance EU securitisation markets. However, mandating a prescriptive disclosure template for private transactions between sophisticated institutional investors is duplicative and burdensome. Institutional investors, including alternative investment fund managers (AIFMs), already conduct extensive, tailored due diligence as a standard market practice and under existing regulatory requirements. A principles-based approach that lets investors determine what information they need to fulfill their fiduciary obligations will better serve investors, reduce compliance costs, and encourage greater investment in EU securitisation markets.
MFA also cautions against applying the disclosure template to transactions involving any non-EU parties including sponsors, lenders, or originators based outside the EU. Inappropriately applying the template to non-EU parties will make it harder for global investors to participate in EU securitisation markets. These requirements will deter global capital from flowing into EU markets and undermine the EU’s goal of building a deeper, more integrated Savings and Investments Union.
Read the full letter here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
