Our latest Funds and asset management regulatory news reports on the European Commission's report assessing the application and scope of the AIFMD. See also our Financial institutions general regulatory news in the related materials margin.

Contents

• AIFMD: European Commission report

AIFMD: European Commission report

The European Commission has published a report to the European Parliament and Council of the EU assessing the application and scope of the Alternative Investment Fund Managers Directive (AIFMD). The report fulfils the Commission's mandate under the AIFMD to assess the functioning of the AIFMD and reviews the leverage calculation methods as required under Article 6 of Commission Delegated Regulation (EU) No 231/2013, which supplements the AIFMD.

Selected findings in the report include:

• the efficacy of the EU AIFM passport has been impaired by national gold-plating, divergences in national marketing rules, varying interpretations of the AIFMD by national supervisors, and its limited scope. Smaller AIFMs unable to comply with all the requirements of the AIFMD must forgo raising capital in other member states or overcome significant barriers to market access. Moreover, the AIFM passport allows marketing only to professional investors, which restricts the cross-border activities of AIFMs wanting to approach semi-professional or retail investors (who are often the subject of restrictive national marketing rules). The distribution of AIFs is subject to MiFID rules, which differentiate between retail and professional investors. Therefore, any change to the definitions of the types of investors in the AIFMD needs to take into account the interaction of the AIFMD with the relevant provisions of MiFID II;
• in the absence of the third country passport being activated, national private placement regimes (NPPRs) differ and create an un-level playing field between EU and non-EU AIFMs;
• the lack of a depositary passport is at odds with the spirit of the single market and there are fears of concentration risk where a single depositary could hold the assets of all AIFs established in a member state;
• there is a suggestion that the current supervisory reporting template could be adjusted, especially where it overlaps with other reporting requirements;
• a trend of expanding non-bank lending is mentioned. Granular information on certain asset classes, such as leveraged loans and collateralised loan obligations (CLOs), as well as the information on indirect linkages between banks and non-banks is currently missing; and
• private equity fund managers, which for their managed portfolio size do not adhere to the regulatory parameters of the AIFMD or of the EuVECA Regulation, encounter significant barriers to marketing their funds in other member states. Consequently, some argue that the AIFMD could be amended to better accommodate the private equity sector by removing unnecessary charges and looking for more effective ways to protect non-listed companies or issuers.

The Commission is still assessing whether there is a need for any proposals, including amendments to the AIFMD.