Following agreement on the Council of the EU’s (“Council”) negotiating position on 9 October 2026, the Economic and Monetary Affairs Committee of the European Parliament is expected to vote on the proposed Market Integration and Supervision Package (“MISP”) in early December, with trilogue negotiations then to commence in early 2027.
MISP is a core pillar of the EU’s Savings and Investments Union (“SIU”) and is aimed at deepening the EU single market. The package consists of three main legislative instruments amending a number of existing EU frameworks including the UCITS Directive and Alternative Investment Fund Managers Directive (“AIFMD”). Among the most relevant provisions from an investment funds perspective are a proposed “passporting upon authorisation” model, a reduction in fund management company passport processing times, the introduction of a depositary passport and an expansion in the direct supervisory powers of the European Securities and Markets Authority (“ESMA”). For a detailed review of the European Commission’s MISP proposals, see our earlier briefing note.
Potential amendments to the Commission’s proposal considered by the Council and the European Parliament to date include:
- the inclusion of a competitiveness mandate for ESMA;
- the extent of the delegation derogation for group entities;
- possible alternative approaches to enhancing EU supervisory convergence other than the Commission’s proposal to empower ESMA to conduct annual reviews of large asset managers and potentially suspend cross-border activities. One ECON report suggested even broader direct supervision of asset managers, while the Council has proposed introducing new supervisory colleges for cross-border asset managers comprised of representatives from ESMA and national regulators.
Timeline
There remains a considerable amount of detail to be negotiated in this package and there are significant areas of contention for asset managers, particularly with regard to delegation and ESMA’s supervisory powers. Member states would have to transpose the Proposed Directive within 18 months of its entry into force. The provisions of the Proposed Regulation would apply from various dates between 12 and 24 months after its entry into force.
Related reading: The Market Integration Package – strengthening capital markets supervisory convergence
Please get in touch with your usual Asset Management and Investment Funds Department contact or any of the contacts listed in this publication should you require further information in relation to the material referred to in this briefing note.
