Réponse de l’AFG à la consultation de l’ESMA sur son projet de RTS dans le cadre de la réglementation ELTIF

ESMA initiated a consultation on draft RTS under the ELTIF regulation, intending to propose level 2 measures by early 2024. The consultation covers cost disclosure (Article 25), redemption policy (Article 18), and matching mechanism (Article 19).
In its response, AFG acknowledges the importance of the proposed regulations but highlights ongoing discussions on cost disclosure and undue costs within other legislations. They urge waiting for a global agreement within the industry to ensure compliance with final outcomes.
AFG agrees with ESMA’s approach of incorporating different cost types into an overall cost ratio using the recommended holding period as an assumption. However, they raise concerns about potential confusion for existing investors due to the coexistence of multiple methodologies.
They suggest expressing each cost type separately according to its nature and proposing a maximum rate of expenses in the ELTIF prospectus. Actual fees would be disclosed in annual reports, providing reliable information for investors.
Regarding the cost of setting up an ELTIF, AFG recommends specifying the expenses related to due diligence, advice, and tax costs as a percentage of the investment value in the prospectus.
AFG advocates for including a specific grandfathering clause to avoid misleading modifications in the cost disclosure methodology for existing investors under Article 25(3).
AFG believes the circumstances listed in the revised Article 2 offer sufficient coverage and flexibility for assessing compatibility between ELTIF and asset life cycles. However, they find certain circumstances difficult to predict.
Regarding the minimum holding period, AFG views it as an initial lock-up mechanism, suggesting it should not be mandatory for ELTIFs. They highlight potential confusion for retail investors due to the coexistence of holding periods under PRIIPs regulation.
AFG supports Option 2 in determining redemption frequency, notice period, and minimum amount of liquid assets, emphasizing a holistic approach tailored to each ELTIF’s characteristics.
The AFG recognizes the limitation of the maximum redemption percentage and supports Option 2, requesting flexibility in setting the period of Y months to consider other parameters defining the liquidity profile of ELTIFs.
The AFG expresses concerns about French retail market constraints, as current ELTIF rules may not comply with the French insurance regulation.
AFG supports a principle-based approach, considering the matching mechanism complementary to the redemption policy and recommends preserving the existing secondary market for French SCPI to maintain ELTIF eligibility.