On 25 February 2010, the FSA published a speech by Dan Waters (Director, Conduct Risk and Asset Management Sector Leader, FSA) entitled Evaluating the prospects for the UK and European market under the Alternative Investment Fund Managers Directive (the Directive).
In his speech Mr Waters discussed recent negotiations on the draft Directive in the Council of Ministers and stated that some of the issues that had previously been agreed have been reopened by the Spanish Presidency and that this is an unwelcome development. In particular he states that the debate around requirements for so-called third-country funds and fund managers is a debate that the Council has already had.
Mr Waters also briefly discussed the EU parliamentary negotiations on the draft Directive. Around 1,700 amendments were tabled by MEPs which is a record number of amendments for any directive in the history of the ECON Committee. The ECON Committee has held its first formal consideration of these amendments and has scheduled a further consideration in March.
- There is a shared view of the need for proportionality and differentiation in the draft Directive between fund managers of different sizes and types.
- Most amendments submitted on depositary provisions called for increased flexibility and differentiation.
- On the issue of depositary liability there is strong support for an alignment to the UCITS standards and the ability for liability to be passed to sub-custodians under certain conditions.
- There is near consensus on a number of other areas including removing the requirements for legally independent valuers and restricting the definition of marketing to the proactive offering or placement by fund managers, rather than also at the initiative of investors.
- Many believe that the rules on third country funds and fund managers should not be protectionist.
Near the end of his speech Mr Waters stressed that it is essential to get the framework right and warned the Council, the Commission and the European Parliament not to adopt the draft Directive in haste.