This week saw the end of the transitional period of AIFMD (Alternative Investment Fund Management Directive). As of July 22nd all Alternative Investment Fund Managers (AIFMs) within the EU fall under the regulation, which was first introduced in 2013. The regulation focuses on the management and marketing of AIFs.
The specific requirements of AIFMD that organisations must meet in order to remain compliant, include:
- Fund Managers now require authorisation to manage AIFs, with multiple levels of authorisation differentiated.
- AIFMD dictates that the risk management function is completely separate from the portfolio management function and other business units.
- Various ongoing reporting requirements to regulators as well as investors, including risk, liquidity management and expenses.
- Remuneration policies for AIFMs must encourage effective risk management in line with the risk profiles and rules of the AIFs they manage.
- Additional controls in regards to safeguarding investments including the mandatory appointment of an independent custodian for each AIF.
However a survey carried out by BNY Mellon on July 22nd highlights that many organisations still have a way to go be fully prepared, we’ve highlighted the key findings below:
- 44% will not have received authorisation from their local regulator by that date
- 31% still need to implement risk and control systems
- 36% have yet to update fund documentation
- 38% have yet to appoint a depository