Out-Law News 1 min. read
27 Feb 2012, 12:43 pm
A new discussion paper (18-page / 360KB PDF) asks stakeholders for their views on some of the concepts which will be used in a planned Directive which aims to create a harmonised regulatory structure for alternative investment fund managers across the European Union.
The European Securities and Marketing Authority (ESMA) said that responses to the paper would help it finalise its policy approach. Draft regulatory technical standards for funds falling within the scope of the Alternative Investment Fund Managers Directive (AIFMD) would follow in spring 2012, it said.
The paper also considers how the new AIFMD will interact with the existing Undertakings for Collective Investment in Transferable Securities (UCITS) Directive, particularly in cases where firms may need to be regulated by both sets of standards.
The AIFMD will apply to any person or company whose regular business is managing one or more alternative investment funds, which can include hedge funds, private equity funds, real estate funds and a wide variety of other types of institutional fund. Under the AIFMD, that person cannot be authorised to act as an alternative investment fund manager unless it also provides portfolio management and risk management functions.
The Directive will also allow fund managers to 'passport' their services throughout the EU on the basis of a single authorisation. A similar scheme will be extended to non-EU funds at a later date, subject to regulatory safeguards.
The discussion paper puts forward some suggested criteria for establishing whether a particular scheme falls within the definition of an alternative investment fund. These may include the means by which it raises capital and for what purposes, the need for collective investment and multiple investors, whether it has a defined investment policy and who owns and controls any underlying assets.
Investment funds expert Daniel Greenway of Pinsent Masons, the law firm behind Out-Law.com, said that the responses to the new discussion paper would lead to a further consultation process to enable ESMA to draft its new regulatory technical standards.
"However, for private equity managers these standards are unlikely to have a huge bearing on the ultimate costs of complying with the Directive or on its decision as to whether to locate a fund onshore or offshore," he said.
UK regulator the Financial Services Authority (FSA) published its own discussion paper (102-page / 682KB PDF) setting out its provisional approach to implementing the AIFMD last month.
