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On behalf of the European private equity and venture capital industry, EVCA yesterday submitted a response to a consultation by the European Securities and Markets Authority (ESMA) on the implementation of the AIFM Directive. The submission includes detailed responses and proposed technical amendments on topics including operating conditions, depositaries (and in particular advice tending towards ex-ante approval), disclosure and leverage. EVCA will respond to a separate ESMA consultation on third countries in due course.
In addition to insufficient tailoring, some of the proposed implementing measures go beyond what AIFMD envisages and impose new obligations not foreseen at Level 1. This would be both contrary to the EU Legislator's intention for the need for consistent and high quality financial services legislation. One example of this is the proposed mandatory application of qualitative requirements, currently only used by the largest global credit institutions and investment banks, and entirely inappropriate for AIFM.
Dörte Höppner, secretary general of EVCA said: "ESMA has done a remarkable job to get to this point and the private equity and venture capital industry is appreciative of the consultative manner in which the Level 2 process has thus far been approached. There is clear recognition within ESMA that the broad scope of the AIFMD necessitates significant tailoring in order to protect Europe's savers and investors from useless cost and increased risk. This must continue, and our submission points out where inconsistencies or misapplication exists, in the hope that AIFMD becomes a robust and meaningful piece of financial services legislation in the best interests of Europe's stakeholders."