The European Securities and Markets Authority’s (Esma) decision not to follow the strict adherence to fund managers’ pay has been applauded by an industry body.
The Securities and Markets Stakeholder Group (SMSG) has welcomed the fact that Esma is allowing flexibility around how fund managers are paid, under both the Ucits directive and the Alternative Investment Fund Manager’s Directive.
Unlike the European Banking Authority (EBA), which has a strict reading of the Capital Requirements Directive (CRD), Esma says that as CRD relates to a different sector of the financial services industry, their can be exceptions for the funds industry.
The SMSG agrees with this interpretation, saying that it is inherent in European law, specifically Article Five of the Treaty on European Union.
The body believes that if Esma had followed the EBA’s approach, it would have led to additional costs as well as inconsistency and instability in the European area as “all regulation proposed and implemented over the last five years within the EU and its Member States has been done in compliance with the proportionality principle as we all know it,” says the statement on Esma’s website.
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