Italian investment funds must comply with new regulations taking effect this week, which cover risk management and investment activities.

Assogestioni, the Italian association of asset managers, said the regulations stem from the country's implementation of guidelines from the European Securities and Markets Authority (ESMA). Those collective asset management regulations take effect as of June 14, but previously established investment funds will have a year from that date to reach compliance.

The changes principally will affect risk management of harmonized, open-ended funds, including investment activities, limits, and risk management systems. But the association said the new regulations also could affect non-harmonized, open-ended funds, reserved funds, and closed-end funds.

Additionally, the guidelines may cause changes to financial statements of open-ended funds.

The guidelines are part of ESMA's Undertakings for Collective Investment in Transferable Securities directive, which also provides guidance on efficient portfolio management, use of total return swaps, and for funds exposed to financial indices through investment in financial derivative instruments or replication of the performance of financial indices. The regulations also address counter-party risk and collateral management for transactions with OTC financial derivative instruments, as well as specific provisions for UCITS exchange-traded funds.

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