At its June Board meeting, FCA made its rules implementing the Alternative Investment Fund Managers Directive (AIFMD) into its rulebook. The rules, and accompanying Policy Statement, reflect the two consultations on implementation. The rules also take account of transposition, also on 22 July, of the EU Regulations on Venture Capital Funds (EUVeCa) and Social Entrepreneurship Funds (EUSEF). These, like the AIFMD Level 2 Regulation, did not have to be implemented into UK laws, so are not reproduced in FCA's rules, but the rules refer to them as appropriate. The rules amend many parts of the Handbook, some fundamentally.
Key areas covered by the rules include:
- a new Investment Funds Sourcebook (FUND) applying to all UK Alternative Investment Fund Managers (AIFMs), whether "full-scope" or "small", branches of EEA AIFMs and depositaries of funds managed by full-scope AIFMs. FUND is not yet complete, but sets out requirements on different types of AIFM in terms of reporting, investment, restrictions on business, risk management, leverage, prime brokerage selection, delegation, marketing and cross-border issues. It contains specific rules on depositary functions and liabilities. It also contains a list of transitional provisions;
- many new definitions in the Glossary;
- amendments to the Senior Management, Systems and Controls Sourcebook (SYSC) to reflect the extent to which it applies to AIFMs and to introduce the AIFM Remuneration Code;
- amendments to the Fees Manual (FEES) to reflect the AIFMD fee structure;
- amendments to the prudential sourcebooks to reflect new definitions (particularly that of a "collective portfolio investment management firm" and AIFMD requirements and to reflect that the UCITS Managers Prudential Sourcebook (UPRU) will be deleted in its entirety on 22 July 2014;
- changes to the Conduct of Business Sourcebook (COBS) to reflect which rules apply to which type of AIFM or UCITS Management Company;
- changes to the Client Assets Sourcebook (CASS) in respect particularly of depositaries and trustees;
- changes to the Supervision Manual (SUP) in respect particularly of controlled functions, passporting and reporting;
- changes to reflect application of the Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme; and
- changes to the Perimeter Guidance (PERG) to include a new section on marketing AIFs and a new chapter on the scope of the AIFMD. The scope chapter includes FCA's views on what is an AIF and what managing an AIF means, as well as guidance on what regulated activities are relevant.
The Dispute Resolution: Complaints (Alternative Investment Fund Managers Directive) Instrument 2013 also amends the definition of "eligible complainant".
FCA has not yet consulted on some aspects of implementation, where it did not have to put rules in place for 22 July. It is likely to consult on many of these later in 2013. These include:
- consequential changes for all parts of the FCA and PRA Handbooks
- rules on fees for managers of EUSEFs and EUVeCas;
- rules for the eventual implementation of European passports for non-EEA AIFMs managing EEA AIFs and for non-EEA AIFs being marketed in the EEA;
- integration into the Handbook of ESMA guidelines on key concepts of the AIFMD, remuneration of key personnel, and reporting by AIFMs;
- guidance on a proportionality framework for remuneration requirements; and
- the transition of rules and guidance affecting UK-authorised funds from the Collective Investment Schemes Sourcebook (COLL) to FUND.
(Source: Policy Statement 13/5)