The one year transitional period for the Alternative Investment Fund Managers Directive ended on 22 July 2014. Nevertheless, some countries are still engaged with the implementation stage, while ESMA and other countries are still addressing ongoing operational queries while at the same time are issuing guidance.
ESMA has issued a new Q&A on the application of the AIFMD. In Ireland, the Central Bank has issued guidance on reporting and reporting templates, a feedback statement on its consultation on Depo-Lite, and a Guidance Note and template for completion of the Minimum Capital Report by Irish authorised AIFMs and UCITS management companies. The IFIA has also issued an “AIFMD Regulatory Reporting – Getting started guide”.
22 July 2014 – end of transitional period and full compliance with AIFMD - Implementation update
22 July 2014 marks the date from which all Alternative Investment Fund Managers (AIFMs) must fully comply with the Alternative Investment Fund Managers Directive (AIFMD). It also marks the end of the one year grace period allowed to fund managers to achieve AIFMD authorisation.
In Ireland, The Central Bank of Ireland (“CBI”) updated its AIFMD homepage on 22 July 2014 to report that “as of close of business on 22 July 2014, the Central Bank has authorised 64 AIFMs. In addition, 35 AIFMs have been registered. In total, 99 AIFMs have the authority to operate within the state and the 64 authorised AIFMs also have the right to market themselves throughout the EU. A further 24 applications are largely complete but authorisation was not finalised because of the firms' own business needs. These may, in due course, be granted pursuant to Art 8(5) of 2011/61/EU.”
In its Register of Authorised Investment Fund Managers, the CBI reports that the total number of Authorised and Registered Alternative Investment Fund Managers is 102.
The “association Francaise de la gestion financiere” reported on 28 July 2014 that “One year after France transposed the AIFMD, more than 200 management companies have been authorised as AIFM by the securities regulator, Autorité des Marchés Financiers (AMF).”
In Luxembourg, as of 22 July 2014, the Commission de Surveillance du Secteur Financier received a total number of 773 applications, comprising 215 requests for authorisation (of which 151 entities have received their AIFM license), and 558 requests for registration (of which 487 entities have been granted the status of registered AIFM).
In the UK, the Financial Conduct Authority reported that 984 applications for authorisation had been received by 5pm on 18 July 2014, 609 of which will be authorised by the end of 22 July 2014, and that a further 93 applications are due for imminent authorisation.
Not withstanding the end of the transitional period and the authorisation of hundreds of managers across Europe, the AIFMD is still in its early stages with some matters still being finalised. As of 22 July 2014, it had still not yet been implemented in Lithuania, Portugal, Poland, Romania, Slovenia, Spain, Iceland, and Norway.
Even in countries where the AIFMD has been fully implemented, the local regulators are still finalising the workings of particular aspects. In Ireland, the CBI has just published a tenth edition of its “AIFMD Questions and Answers” to provide guidance on Depositary Services and Remuneration.
Central Bank of Ireland - AIFMD Reporting Guidelines
In August 2014, the CBI published its ‘Reporting Guidance for Alternative Investment Fund Managers’ on its website (the “Guidance”). It advises on how fund managers are to complete and submit the information required by ESMA in accordance with ESMA's Reporting Guidelines.
The Guidance is geared towards AIFMs authorised in Ireland or marketing funds here. It provides information on the reporting requirements relating to the extension of the CBI’s online reporting system, and it should be used with the CBI’s ‘Online Reporting System User Manual’ and the CBI’s AIF Rulebook. The CBI has also uploaded reporting templates to its website.
The Guidance advises on both components to the AIFM’s reporting obligation to the CBI:
- Reporting under Articles 3 and 24 of AIFMD, and
- Prudential Returns to the CBI.
Firstly, the information that AIFMs are obliged to submit are detailed in Article 3(3) (d) and 24(1), (2) and (4) of the AIFMD, as applicable, for onward transmission to ESMA. It is the responsibility of the AIFM to determine if it has a reporting obligation to the CBI and it is also the responsibility of the AIFM to determine its reporting frequency.
Two forms must be submitted by the AIFM under AIFMD; the AIFM Report and an AIF Report for each AIF that the firm is required to report on; these may have different reporting frequencies.
The format of the report can be either in Excel or in XML. The CBI encourages the XML format to be used where possible, as the Excel files take longer to validate and submit through the online reporting system.
The Guidance confirms that the CBI are also requesting the information recommend by ESMA in its Opinion regarding systemic risk also be submitted.
Secondly, AIFMs authorised by the CBI have prudential reporting obligations as mandated in the AIF Rulebook. The table below details the additional prudential returns that authorised AIFMs are required to submit.
IFIA’s AIFMD Regulatory Reporting – Getting started guide
The Irish Fund Industry Association has issued a presentation on getting started with AIFMD regulatory reporting. It assists with identifying:
- your reporting requirements
- the key actions that need to be taken by AIFMs and administrators
- which data fields are mandatory, conditional or optional
- which fields are static and which are dynamic
- the appropriate data owner (AIFM or administrator) for the various categories of data
- the appropriate complexity level of the various data requirements
- key areas of judgement/uncertainly which may need to be agreed between AIFMs and their service providers through various protocols, and provides a sample protocol.
Central Bank of Ireland - Minimum Capital Report for AIFMs and UCITS management companies
The CBI issued this Report to provide guidance to firms on compiling the Minimum Capital Requirement Report. This information must be submitted to the CBI by firms authorised under either AIFMD or UCITS, along with half yearly and annual audited accounts at specified intervals. It must be signed by a director or a senior manager of the management company.
Consultation on carrying out depositary duties in accordance with Article 36 of AIFMD
The Central Bank of Ireland published a consultation paper (CP78) in March 2014 on carrying out depositary duties in accordance with Article 36 of the AIFMD. Under Article 36, it is possible for Member States to allow EU AIFMs to market non-EU alternative investment funds (“AIFs”) to professional investors in their territories. This marketing is subject to certain requirements, including a requirement for the funds to have a depositary.
CP78 sought suggestions on how to manage conflicts of interest when the fund’s administrator proposes to also act as depositary under Articles 21(7) and 21(9). The Feedback Statement published by the CBI notes that such conflicts may arise and that they may be substantial. The CBI proposes that to address that concern, certain requirements will be made to the AIF Rulebook within Chapter 5 – Fund Administrator Requirements.
The European Securities and Markets Authority (ESMA) is also still clarifying matters. Its publication on 18 July 2014 of an updated version of its “Questions and Answers on the Application of the AIFMD” provides guidance on Depositaries, Calculation of Leverage and Reporting to national competent authorities under Articles 3, 24 and 42. Similarly, on 8 August 2014 it published the official translations of its “Guidelines on reporting obligations under Articles 3(3)(d) and 24(1),(2) and (4) of the AIFMD”.
The purpose of these guidelines is to ensure common, uniform and consistent application of the reporting obligations to national competent authorities (NCAs) stemming from Articles 3(3)(d) and 24(1), (2) and (4) of the AIFMD. They provide clarification on the information that alternative investment fund managers (AIFMs) must report to NCAs, the timing of the reports and the procedures to be followed when AIFMs move from one reporting obligation to another. The guidelines will apply from 8 October 2014 (that is, two months after publication). ESMA published a revised final report of these guidelines in November 2013.