FN: Industry told to pore over AIFM detail

11 July 2011

Private equity lobbyists want industry executives to put in extra effort during the quiet summer period to press their case on the detail of the Alternative Investment Fund Managers Directive (AIFMD).

The final text of the wide-ranging Directive was agreed in October and comes into force this month, with working groups in four countries appointed by the European Securities and Markets Authority (ESMA) to scrutinise key details within it, in what is termed a level-two phase, over the summer. A fifth working group, yet to be appointed, will discuss rules regarding investment in non-EU-domiciled funds. The groups will put their views to ESMA, which will present its technical advice to the European Commission in November, and lobbyists believe the private equity industry must use the time until then to play a part in defining the details.

Key elements of AIFM to be examined and the countries responsible for them, according to lawyers, are listed below:

Germany

Bundesanstalt für Finanzdienstleistungsaufsicht - General provisions, authorisation and operating conditions
Germany is responsible for looking at the procedures for small managers to opt into the Directive, and for the calculation of the minimum thresholds to fall within the AIFM’s scope, as well as the calibration of capital requirements to cover risks related to professional indemnity. There are also proposed measures relating to general principles of operation, conflicts of interest, risk management, liquidity management systems and procedures, and investment in securitisation positions.

France

Autorité des Marchés Financiers - Depositary
Measures to be examined include the AIFM’s requirement for firms to appoint a depositary – a kind of custodian – the equivalence of regulation and supervision in non-EU countries, conditions for the performance of depositary functions, due-diligence obligations, the segregation of assets and the loss of financial instruments.

UK

Financial Services Authority - Transparency requirements and leverage
The UK regulator will look into measures relating to the definition of leverage, the content and format of annual reports, disclosures to investors and competent authorities, and the circumstances in which regulators can take action to limit the use of leverage.

Republic of Ireland

Bank of Ireland - Supervision
Ireland’s area includes the AIFM’s scope and exemptions from it.

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