The House of Lords EU Select Committee has published a report on the draft Alternative Investment Fund Managers Directive.

The Committee has serious concerns over certain aspects of the draft Directive. These include:

  • The one size fits all approach of the Directive fails to acknowledge the differences in how alternative investment funds (AIFs) are structured and operate. The Directive needs to be tailored in a way that respects the differences between the types of funds it covers to avoid unintended regulatory consequences.
  • The Directive introduces requirements for disclosure to supervisors by managers. These requirements should take into consideration the different types of AIFs. Requirements on provision of information should be proportionate and carefully thought out to ensure that the Directive provides supervisors with the relevant data and that supervisors have the resources to analyse this data.
  • The proposal for a single leverage cap on managers should be replaced with a provision for national supervisors to have the power to impose leverage caps where appropriate, based on the aggregated information they receive from fund managers.
  • The Directive needs to be in line with, and complement, global arrangements. In particular there needs to be coordination with the US regulatory regime.
  • The Directive will make it difficult, if not impossible, for third-country regimes to achieve the equivalency required for managers to obtain access to the EU passport and therefore access to the EU market. The Committee therefore supports the continuation of national private placement regimes to maintain options for investors.

View House of Lords EU Committee - Directive on Alternative Investment Fund Managers, 10 February 2010