Asset Management

Investment Managers Sleepwalking Towards Europe's AIFMD Regime - Survey

Mark Shapland, Reporter, London, 15 July 2014

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The most important European financial regulatory initiative to hit the investment management industry since MIFID came into force in 2007 is just around the corner and a recent survey shows that the industry is grossly under-prepared.

The most important European financial regulatory initiative to hit the investment management industry since MIFID came into force in 2007 is just around the corner and a recent survey shows that the industry is grossly under-prepared.

Next week the Alternative Investment Fund Management Directive (AIFMD) is fully introduced and only 53 per cent of alternative investment fund managers have filed under the legislation, says the survey by Alceda and Kepler Partners.

The survey also revealed that 32 per cent of fund managers said they were already compliant, while a further 19 per cent said they were planning to submit an application before the 22 July deadline.

Unsurprisingly European managers responding to the survey were better prepared for the directive while managers in the rest of the world have some catching up to do. 

AIFMD is designed to give investors greater protection and means hedge funds and private equity firms are now subject to the same rules as mutual and pension funds. The rules were proposed in the aftermath of the 2008 financial crunch; critics have said they are an unnecessarily draconian set of rules to deal with a problem that has been exaggerated.

Core measures include requiring fund managers to obtain authorisation before they operate in the EU; satisfying authorities about their internal risk management arrangements; providing certain information to investors; rules on leverage and custodial standards; and rules for offshore funds and managers located in so-called third countries.

When asked which aspects of AIFMD posed the greatest threats to their business 30 per cent of respondents cited depositary costs, remuneration and the end of private placement as their most serious concerns. There was also the perception that AIFMD would lead to more offshore funds moving onshore.

"It’s clear that the general understanding of the implications of AIFMD on the alternative fund management industry is low, with 41 per cent of respondents to our survey stating that they have a limited understanding," said Georg Reutter, partner at Kepler Partners.

"In particular we found that alternative asset managers headquarted outside Europe are potentially sleepwalking into the unknown despite the potential impact on their business," he added.

Overall 56 alternative fund managers from around the globe took part in the survey. 

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