Key Takeaways From ESMA Final Report On The 2022 CSA On Valuation

Background

In January 2022 ESMA announced the launch of a common supervisory action (CSA) with national competent authorities (NCAs) that would focus on the valuation of less-liquid assets held by UCITS and open-ended AIFs including unlisted equities, unrated bonds, corporate debt, real estate, high yield bonds, emerging markets, listed equities that are not actively traded and bank loans (Less Liquid Assets).

The objective of the CSA was to investigate whether authorised managers of UCITS and open-ended AIFs comply with the organisational requirements set out in the UCITS and AIFMD frameworks with respect to asset valuation; and adhere to valuation principles and methodologies with an objective to reflecting a true and fair view of their financial positions both under normal and stressed market conditions in line with the existing UCITS and AIFM valuation provisions.