20 August 2013

ESMA publishes opinion on draft RTS on types of AIFMs

ESMA initially identified a number of ways in which AIFMs could be differentiated for the purposes  of Article 4(4). These included whether the fund is externally or internally managed, employs leverage or is substantially leveraged. After a first public consultation on this approach, ESMA came to the conclusion that of the possible differentiations initially identified, only the notion of open-ended/closed-ended funds should be selected and covered by the draft RTS under Article 4(4) of the  AIFMD at this stage.

ESMA considered that the characteristics of AIFs that make it possible to distinguish whether an AIFM is managing an AIF of the open-ended or closed-ended type should be defined in order to ensure that the rules on liquidity management, the valuation procedures and the transitional provisions of the AIFMD are applied to AIFMs in a uniform manner.

ESMA considered that it would not be proportionate to require managers of AIFs with relatively infrequent redemption opportunities to apply the full set of liquidity management obligations set out in Article 16(1). Similarly, ESMA was of the view that its proposed approach was entirely consistent with the provisions on valuation in Article 19(3) of the AIFMD; since the valuation of the assets and the calculation of the net asset value must be carried out at least once per year, it seemed reasonable to treat funds that offer redemption opportunities less than once per year as closed-ended (i.e. not to require a more frequent valuation). ESMA consulted twice on this approach and the feedback received from a broad range of stakeholders, including consumer representatives, was broadly positive. In addition, in our more recent discussions with stakeholders following receipt of the Letter, the concern has been raised that consumers would expect redemptions to be possible at least once a year when the term “open-ended” is used to describe a fund.

ESMA considered that the proposed definition of AIFMs of open-ended/closed-ended AIFs does not have an undue impact on the obligations incumbent on AIFs and  their managers.

ESMA is of the view that the approach submitted to the Commission in April was appropriate taking into account the transitional provisions of the Directive. Indeed, it is only when an AIFM exclusively manages closed-ended AIFs falling under the provisions of Article 61(3) and (4) of the Directive that it is exempted from the obligation to be authorised or registered under the AIFMD.  Whenever an AIFM also manages at least one open-ended AIF, it is subject to the AIFMD regime (in terms of authorisation or registration).

Full opinion

Letter

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