ESMA published its draft regulatory technical standards (RTS) to determine types of alternative investment fund managers (AIFMs), where relevant in the application of the AIFMD. The draft RTS aim to provide clarity in distinguishing AIFMs managing alternative investment funds (AIFs) of the open-ended type and AIFMs managing AIFs of the closed-ended type, in order to apply the rules on liquidity management, the valuation procedures and the transitional provisions of the AIFMD. This report includes a feedback statement from the consultation which was issued in December 2012. The Draft RTS will be submitted to the Commission, which will have a period of three months to decide whether to endorse them.
The draft RTS provide that an AIFM may be either an AIFM of open-ended AIF(s) or an AIFM of closed-ended AIF(s).
An AIF will be categorised as open-ended where some or all investors have the right to redeem their units or shares out of the assets of the AIF where all the following conditions are present:
- there is a right to redeem at least once a year. In deciding whether the right to redeem may be exercised at least once a year, action taken by an AIFM to ensure that the stock exchange value of the units/shares of the AIFs it manages does not significantly vary from their net asset value shall be regarded as equivalent to the right to redeem out of the assets of the AIF;
- the redemption price (before any redemption fee) does not vary significantly from the NAV per unit/share at the time when the price is determined in accordance with AIF's rules.
Lock-up periods, or powers to impose side pockets or powers to apply special arrangements, such as gates, or suspensions, should not be taken into account in determining whether an AIF is open-ended.
An AIFM will be categorised as an AIFM of closed-ended AIFs where it manages at least one AIF that is not open-ended. Where a change in the redemption policy of the AIFs has the effect of changing the type of AIFs an AIFM manages, the rules relevant to the new type of AIFs shall be applied to such AIFs by the AIFM.