Does one size really fit all? Lately, in the world of alternative investments, it has to. The Alternative Investment Fund Management Directive (AIFMD) has been signed into law in all EU member states over the past few years, affecting change in the asset and wealth management market and its firms through enforcement of a universal regulatory framework. While it is a directive enforced by the European Commission, AIFMD’s sphere of influence extends to all alternative investment funds (AIFs) that market to or involve European investors, regardless of where they are based.
These regulations are meant to do many things: decrease market instability, enhance supervisory practices, and foster cross-border competition. Concrete changes we will see include new structures for future AIFs and a passport regime that will regulate and encourage cross-border interaction. All firms involved have been preparing for years now, adjusting their legal structures, processes, and budgets.
So why was July 22nd important? It was the deadline by which all preexisting AIFs should have fully complied with the directive. However, the process doesn’t end there. Key dates for now and the future include:
- July 22, 2014: Managers operating pre-July 2013 must be authorized and comply in full
- July 2013-2014: Passports are available to EU managed EU funds and non-EU managed EU funds
- July 2015: Passports become available to EU managed non-EU funds and non-EU managed non-EU funds
- January 22, 2019: European Commission may end domestic private placement regimes
AIFs are changing in many ways, but reporting will likely have the biggest impact because of the increased amount of time, effort, and money that it necessitates. The Annex IV Report is the main reporting component of AIFMD, and requires quarterly accounting of different aspects of an AIF so as to offer a detailed picture of it for review.
By applying a single framework to all AIFs and all EU member states, it may appear as though the European Commission is expecting one size to fit a varying population of firms. There is wiggle room—the directive has different nuances country by country—but the overarching structure remains universal and mandatory.
Regardless of the generalities and intricacies that AIFMD entails, one thing is clear: with such a diverse collection of governments, getting one size to fit all is surely no easy feat.
Martin Engdal is Market Strategist and Director of Solution Marketing at Advent EMEA. In this role, he has responsibility for strategic positioning of Advent’s solutions in EMEA and for driving Business Development efforts in Europe, Middle East and Africa.
Martin Sreba has been with Advent since 2000, holding a variety of senior roles in product services and sales. Currently he is a Principal in the Global Accounts Sales Organization.