Draft recast Regulation on investment fund statistics

Frequently asked questions

1. Why does the ECB Regulation on investment fund statistics need to be updated?

The principal purpose of investment fund statistics is to provide the ECB with a comprehensive picture of developments in the euro area investment fund sector. Such statistics are used for the tasks of the European System of Central Banks (ESCB), including in relation to monetary policy and to contribute to the stability of the financial system. Statistics on investment funds have been reported under ECB regulations since December 2008.

The ECB’s statistical regulatory framework needs to be kept up to date and fit for purpose, and to this end existing regulations are periodically reviewed. The current reporting requirements for investment funds are laid down in Regulation (EU) No 1073/2013 of the ECB of 18 October 2013 concerning the assets and liabilities of investment funds (recast) (ECB/2013/38). Since this Regulation was adopted, the relevance of the euro area investment fund sector to monetary policy and financial stability has increased.

Following an evaluation of the statistics currently collected under this Regulation and new user needs which have arisen since the last review, such as requirements for monthly data and additional breakdowns of assets and liabilities, the ECB now proposes to recast this Regulation. The recast Regulation will address high priority needs for additional data for analysing developments in the investment fund sector.

2. What kinds of reporting agents are covered by the Regulation?

In order to ensure clarity and continuity in reporting, the definition of an investment fund in the recast Regulation has not changed in substance from the definition applicable to the Regulation currently in force. Regulation ECB/2013/38 is addressed to investment funds that fall within the reference reporting population in the euro area for the purposes of collecting ECB statistics.^[1] Subject to national practices as specified in the recast Regulation, in some cases other types of financial institutions may be included in the reporting population in order to obtain a complete view of the sector.

Total assets of euro area investment funds amounted to approximately €17 trillion in August 2023, compared to €8 trillion in October 2013 when the previous recast of the Regulation was adopted.

3. Where will the recast Regulation apply?

The recast Regulation will impose reporting obligations on reporting agents resident in those EU Member States whose currency is the euro (euro area countries).

However, non-euro area Member States should also implement all the measures they consider appropriate for collecting the statistical information needed to fulfil the ECB’s statistical requirements and for making timely preparations for joining the euro area.

4. What kinds of new data will be reported?

The proposed recast Regulation includes additional aggregated breakdowns of the assets and liabilities of investment funds, new information on income and fees, granular information on securities without publicly available identification codes and information on the classification of investment funds. Data will also generally be required at a monthly frequency, whereas previously most data were required at a quarterly frequency. This will improve the usability of the data, as the higher frequency will facilitate better identification of events and causality and the data will be more up-to-date.

Many euro area investment funds are already reporting many of the new requirements in the recast Regulation to national central banks (NCBs) or national competent authorities. In these cases, the impact of the recast Regulation on current reporting will be smaller.

5. Why does the ECB need so much data?

Non-bank financial intermediation has significantly increased in importance in the euro area in recent years, as recognised in the ECB’s monetary policy strategy review carried out in 2020-21. As investment funds are the largest subset of non-bank financial intermediaries in the euro area in terms of total assets, detailed and timely statistics on them are needed for the purposes of both monetary policy decision-making and financial stability analysis.

In addition to the aggregated investment fund dataset, the requirements in the proposed recast Regulation will support more detailed analysis (thanks to the increased granularity) and will feed into the integrated financial accounts for the euro area compiled by the ECB, which reflect the flow of funds between institutional sectors.

6. How costly will this recast Regulation be for reporting agents?

The ECB is aware that introducing new reporting requirements can increase the burden on reporting agents. For this reason, and with a view to minimising this burden, the ECB conducted a comprehensive merits and costs procedure.

This long-established procedure, which is used for all of the ECB’s new statistical requirements, is conducted to confirm that the policy relevance and/or operational usefulness is sufficient to justify the set-up costs and ongoing costs of any new requirements. Under the procedure, consideration is given to alternative data sources which could meet user needs.

Implementation costs differ across countries owing to current national requirements, which in many cases already include features introduced in the proposed recast Regulation. For example, monthly reporting is already current practice in many euro area countries, but it will have a considerable impact in those countries where much of the data are currently reported at quarterly frequency.

Overall, the package of new reporting requirements strikes a good balance between the availability and quality of data for users and the reporting or compilation burden for investment funds and NCBs.

7. Did the ECB consider the ongoing updates of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities Directive (UCITSD) with a view to limiting the reporting burden?

The ECB fully supports the principle of aligning regulatory reporting to limit the reporting burden for investment funds, which at the same time will increase harmonisation between different datasets.

The collection of data on a fund-by-fund and security-by-security basis, as required to some extent by the existing Regulation and expanded in the proposed draft recast Regulation, will provide a good basis for harmonisation of the reporting frameworks of the ECB, AIFMD and UCITSD.

Where possible, when drafting the recast Regulation, definitions have been aligned with those in the current AIFMD reporting framework.

8. Will other ECB legal acts connected with the recast Regulation be changed?

It is envisaged that Article 3 of Guideline ECB/2021/12^[2], which sets out the requirements for NCBs to report aggregated investment fund statistics to the ECB, will be amended at the same time as the Regulation.

Moreover, it is envisaged that Decision ECB/2014/62^[3], which determines, subject to ECB Governing Council approval, the categories of investment funds that may benefit from derogations allowing them to report statistical information to NCBs in line with their asset valuation frequency, will be repealed. In view of national accounting rules that may allow certain investment funds to value their assets at less than monthly frequency, it is no longer considered necessary for the Governing Council to determine these categories. As provided for in the recast Regulation, it is instead considered appropriate for NCBs to have the discretion to grant such derogations in view of the limited categories of investment funds to which these may apply and the limits on their duration.

9. Who was involved in drafting the recast Regulation?

The Regulation has been drafted carefully and transparently by the ECB and the NCBs of all EU Member States, taking into account the opinions of key stakeholders via a merits and costs procedure which assessed the perceived benefits of the additional data against the costs of the proposed changes.

In particular, this involved an evaluation by a large number of investment funds of the anticipated implementation costs and ongoing costs of the proposed new statistical features, while the users of these statistics within the ESCB evaluated the benefits of the proposed new data for their analysis. Due consideration will also be given to comments submitted in the public consultation.

10. When will the recast Regulation enter into force?

The recast Regulation will enter into force 20 days after its publication in the Official Journal of the European Union, which is expected in early 2024. Reporting under the new requirements is scheduled to commence with respect to the June 2025 reference period.