The largely unchanged delegation framework of the Alternative Investment Fund Managers Directive (AIFMD) and Undertakings for the Collective Investment in Transferable Securities (Ucits) review by the European Commission and co-legislators is “positive news”, said European Fund and Asset Management Association (Efama).
“This will benefit investors, especially in terms of broader access to investment opportunities and diversification,” it stated. While new delegation reporting may seem “duplicative”, Efama hoped it would provide the transparency needed for national supervisors.
Asset managers must select at least two tools and retain the discretion to activate or deactivate them, a crucial element of their “agency” business model, Efama noted. National authorities retain limited powers to intervene in suspensions of redemptions and subscriptions after consulting the fund manager, it added.
Additionally, the AIFMD introduces provisions for appointing a depositary in a different country than the fund under specific circumstances, following case-by-case assessments by the relevant authority, reinforcing investor protection.
However, EFAMA raises questions about certain aspects of the review. Specific product-focused provisions, such as those for loan-originating funds, are deemed ill-suited for inclusion in the AIFMD, and the retention requirements are seen as potentially impeding risk management. The AIFMD primarily regulates management companies and is relevant to a professional investor base, making references to “undue costs” appear inappropriate.
Tanguy van de Werve, director general, Efama, commented: “From the start, EFAMA advocated for a targeted review of the AIFMD in order not to undermine a successful framework. Allowing the AIFMD and Ucits directive to remain a robust regulatory framework with improved rules will help Ucits and AIFs to remain internationally competitive and attractive investment options.”
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