The final text of the Alternative Investment Fund Managers (AIFM) Directive was ratified by the European Parliament in November 2010. The Directive, which was subject to much criticism in the UK from industry and investor representative bodies at the draft stage, aims to create a comprehensive framework for the direct regulation and supervision of the non-UCITS alternative investment industry in Europe including hedge funds, private equity funds, investment trusts and property funds. Notwithstanding European Parliament ratification, a number of stages require to be completed before the Directive can be implemented into UK law (which is required by the end of the first quarter of 2013).
Importantly, the AIFM Directive contains over 60 references to aspects of the Directive where either the European Council or the European Securities Market Authority (ESMA) is required to write detailed rules, technical standards or guidance to clarify the operation of these aspects (Level 2). This Level 2 process may well take 12 to 18 months. As a result, many aspects of the detailed operation of the AIFM Directive will not become clear for some time to come.
On 3 December 2010, the Committee of European Securities Regulators (CESR) published a "call for evidence". This call for evidence sought stakeholders’ input by 14 January 2011 on the provisional mandate from the European Commission regarding CESR’s technical advice on the implementing measures on the Directive, with a view to such input helping ESMA (which became CESR's successor on 1 January 2011) in the development of its draft advice to the European Commission on the content of the implementing measures.
The topics relevant to the provisional request for assistance were divided into four separate sections:
- Part I – general provisions of the AIFM Directive and the authorisation of and operating conditions for alternative investment fund managers falling within the Directive's scope
- Part II – provisions relating to depositary requirements
- Part III – provisions relating to transparency requirements and leverage
- Part IV – provisions relating to the supervision of alternative investment fund managers, including third country alternative investment fund managers.
In addition, the call for evidence asked stakeholders for feedback on certain other issues, namely:
- Which categories of investment manager and investment fund should fall within the scope of an alternative investment fund manager?
- Among those topics to be covered by implementing measures, which should most appropriately be covered in the form of regulations and which in the form of directives?
- What useful sources of data and statistical evidence might ESMA benefit from in the preparation of its advice to the European Commission?
Numerous representative bodies and participants from the banking, insurance and investment management communities have responded to the call for evidence. ESMA will publish its draft advice to the European Commission for consultation during 2011.
View CESR/ ESMA call for evidence and responses (web page).