The Alternative Investment Fund Managers Directive (AIFMD) seeks a common EU approach to bringing hedge funds, private equity and other types of funds without a UCITS passport within the scope of regulatory supervision, and to bringing transparency and stability to the way these funds operate.
The Directive aims to:
- Ensure all Alternative Investment Fund Managers are subject to appropriate authorisation and registration requirements
- Provide a framework to monitor macro-prudential risks through regular reporting obligations
- Ensure proper monitoring and limitation of micro-prudential risks
- Provide a common approach to protecting professional investors in Alternative Investment Funds (AIFs)
- Enhance public accountability of fund managers holding controlling stakes in companies
- Develop a European single market for AIFs.
Following on from the final approval of the AIFMD by the Council of the European Union on 27 May 2011, ESMA published its final technical advice on 16 November 2011. This 500-page, largely technical document, which can be consulted on ESMA’s website*, has not resulted in any major surprises. However, further clarity is needed on key issues, including depositary liability, delegation to third countries, the definition of what qualifies as a letter box entity, leverage reporting and cooperation agreements for third countries. Although these areas will need to be addressed in the final guidance to be issued by the European Commission during 2012, it is now time to consider the implications and any first mover advantage that may exist.
The European Commission is now preparing the Implementing Measures based on ESMA’s advice, with the Directive expected to be transposed into national law by 22 July 2013. Once AIFMD is in effect, all AIFMs operating on European soil will have to be authorised by the relevant home member state and demonstrate that they are suitably qualified to provide AIF management services.
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