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APFIPP - Portuguese Association of Investment Funds, Pension Funds and Discritionary Asset Management

APFIPP strongly supports all efforts to create a truly Pan-European level playing field for all players in the financial markets. We believe that the objective of a single market for investment firms and Investment Fund Managers can only be achieved if the same rules apply in all Member States, preventing the risk of dislocation through regulatory arbitrage.

Therefore, APFIPP welcomes EBA and the European Commission’s initiative to establish common rules to calculate the fixed overheads of previous year for the purpose of Article 97(1) of Regulation (EU) No 575/2013.

APFIPP agrees with EBA’s view that the subtractive approach is more prudent, as it ensures that changes to the accounting framework are automatically taken into account and cannot be arbitraged by changing the accounting categorization. At the same time we also believe that, given the different National GAAPs in EU Member States, an additive approach would be less effective to establish the Pan-European level playing field mentioned above.
APFIPP considers that tax expenses and provisions for certain risks included in the investment firms audited annual accounts should not be included in the calculation of the fixed overheads either by not including these items in the total expenses mentioned in Paragraph 1 of article 36, or by expressly including them in the list of Article 36(1).

These expenses are, by nature, variable and depend on the activity developed by the investment firm in each year .Therefore, it should be clarified that they are not included in this calculation.

Additionally we urge for a greater specification of the definition of extraordinary non-recurrent expenses mentioned in article 36.1.h.
Not Applicable.
APFIPP agrees with the proposed 20% threshold. We do not foresee any impact of the introduction of this threshold.
APFIPP considers that the inclusion of a de minimis amount would protect small investment firms and would allow them to expand their businesses.

We propose that the de minimis amount should be fixed at EUR 125 000. This figure, when applied to UCITS Fund Managers means that only changes in the business of the firm that imply doubling the initial capital demanded by Article 7(1)(a) of UCITS IV Directive (Directive 2009/65/EC of the European Parliament and the Council of 13 July 2009, on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)) should be considered “material”.
Not Applicable. Given the current dimension of Portuguese Investment Firms and Fund Managers we do not expect that any change would result in additional requirements of own funds equal or greater than EUR 2 million.
Currently, all Investment Firms and Fund Managers own Funds are much higher than the minimum required by Article 97(1) of Regulation (EU) No 575/2013.

The change proposed would, in some cases, determine a greater amount of fixed overheads and, in other, a lesser amount. Nevertheless, even in the cases where the fixed overheads determined by the subtractive are higher than the value that is currently assumed, the own funds already existing are sufficient enough to accommodate the increase in the fixed overheads. So we expect that no additional own Funds are required.

However, recently, when transposing UCITS IV Directive into the Portuguese legal framework, the legislator opted by aligning the own funds required to UCITS Management Companies to those laid down in the UCITS Directive. This will surely result in less own funds being required for Management Companies and, in some cases, the minimum defined in Article 97(1) of Regulation (EU) No 575/2013 may be relevant to the determination of the own funds in those companies.

At this time, the impact assessment does not include a study on how the proposed changes will affect the own funds required by the new Portuguese legislation mentioned in the previous paragraph.
Yes, we agree.
Sérgio Brito