• Stability in national rules: The report reveals that national rules governing fund marketing have remained largely unchanged since the 2023 report. This stability is attributed to the harmonisation efforts driven by the transposition of the Cross-Border Distribution of Funds (CBDF) Directive and the implementation of ESMA Guidelines.
• Statistical insights:
  • Luxembourg and Ireland dominate as the leading jurisdictions for cross-border fund notifications, accounting for 59 per cent and 30 per cent of the total, respectively.
  • UCITS (Undertakings for Collective Investment in Transferable Securities) represent 56 per cent of the total notifications, while Alternative Investment Funds (AIFs) make up 44 per cent.
• Marketing communications:
  • The report underscores the importance of compliance with Article 4 of Regulation (EU) 2019/1156, which mandates that marketing communications must be fair, clear, and not misleading.
  • Common breaches include unbalanced presentations of risks and rewards, misleading ESG claims, and inadequate disclosure of key investor information.
• Supervisory practices: While ex-ante verification of marketing communications is rare, many jurisdictions have adopted ex-post supervisory approaches, focusing on risk-based assessments.
• Breaches and enforcement: Examples of breaches include misleading sustainability claims, unbalanced risk-reward presentations, and inadequate accessibility to key documents like prospectuses and investor rights summaries.

Implications for stakeholders

The report serves as a critical resource for fund managers, compliance officers, and legal advisors involved in cross-border fund distribution. It highlights the need for rigorous adherence to marketing communication standards and the importance of understanding jurisdiction-specific requirements.

ESMA will submit this report to the European Parliament, the EU Council, and the European Commission. The findings aim to inform future regulatory adjustments and enhance the harmonisation of fund marketing practices across the EU.

ESMA’s press release can be accessed here and the Report here