The Alternative Investment Fund Managers Directive (AIFMD)
19 June 2012
The AIFMD is the central plank in the European Union’s plan to devise pan-European regulation covering every aspect of the financial services sector. It is an unwelcome development for the vast majority of UK non-retail fund managers to whom the Directive’s main goal of greater cross-jurisdictional conformity will be of little value.
The AIFMD takes the relatively successful UCITS Directive as its model and attempts to impose a conforming standard across the entire funds industry. The obvious difference between the two Directives is that fund managers can opt out of UCITS, but cannot opt out of the AIFMD. Retail fund managers can weigh up the marketing and brand-recognition benefits that UCITS brings against the prescriptive regulatory regime and, if the latter outweigh the former, choose to raise non-UCITS funds. Subject to ill-conceived de minimis provisions, the AIFMD mops up the entire remaining universe of non-UCITS funds. It is little wonder that its prescriptive approach will render many existing fund models inoperable, not by design, but rather through failure to adequately contemplate the enormous variety of investment fund currently available in the market. Such an approach may be justifiable in a retail context, but in this case, the result is to impose costs and investment restrictions on sophisticated investors in order to provide protections they have not sought.
As the detail of the Directive emerges, Osborne Clarke is actively helping its clients to identify potential barriers to business as usual, devise fund structures and other solutions that minimise the impact of the regulation and spot opportunities to set themselves apart from competitors in the emerging regulatory landscape.
If you would like to speak to one of our Financial Institutions Group about the AIFMD, please contact David Blair, Paul Anning, Tim Simmonds or Tina Lai.
Useful external links
The AIFMD text
The AIFMD text level 2 implementation
European Commission AIFMD web page
FSA Consultation on AIFMD implementation
HM Treasury Consultation on AIFMD implementation
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