AIFMD: ESMA publishes ‘Final Advice’

In late November 2011, the European Securities and Markets Authority (ESMA) published its final advice (the Final Advice) to the European Commission (EC) on possible implementing measures (also known as the Level 2 measures) under the Alternative Investment Fund Managers Directive (AIFMD). In many areas, the alternative fund industry now has a clearer picture of what AIFMD will mean for it.

While the EC can still introduce amendments in areas where it has strong views, substantial portions of the Final Advice will probably pass through without significant changes.

ESMA has listened to responses to two consultations that took place in the summer and early autumn, and has made changes accordingly. But, on a number of key issues, unsatisfactory and unaddressed positions remain, making it particularly important that the alternative fund industry continues to engage in dialogue with the EC until the final measures are adopted in spring 2012.

In our view, these issues (notably around depositaries and ‘third countries’) have the potential to cause great difficulty, and therefore cannot be ignored by the industry – asset managers and service providers alike – when it comes to preparing for the AIFMD.

Timetable and political process

The timetable to implementation is now short. The EC is now talking informally to industry about ESMA’s Final Advice before sending its finalised draft measures to the European Council and European Parliament in March 2012. Both Council and Parliament will then have three months to review the draft measures, meaning the EC is likely to formally adopt the final implementing measures in July 2012.

From a legislative process perspective, the Commission has not yet addressed the important issue of whether or not the Level 2 measures will primarily take the form of Regulations (which are automatically binding on EU Member States), or Directives. Directives have to be implemented by each of the EU Members States and this can lead to untimely implementation and different interpretations when they are introduced into national regimes. On the other hand, it does preserve Member State discretion to have regard to its own legal frameworks, against which Regulations can fit very awkwardly.


In our AIFMD News Edition 10, Winter 2011 click here we review ESMA’s Final Advice, discussing the different areas in detail and summarising relevant key issues. For example, we highlight areas where ESMA has made positive changes, such as on the ‘third country’ front, where it has grasped the risks posed by the ‘equivalence’ standard.

In general, our Newsbrief follows the structure of the Final Advice and is split into five main categories:

  1. General operating conditions, including valuation, risk and liquidity management and organisational conditions.
  2. Depositary requirements.
  3. Implementing measures on leverage calculation.
  4. Transparency requirements.
  5. Third countries.

Our view

We believe that even after the publication of the Final Advice, the lack of clarity around certain key areas in AIFMD remains a concern. Some firms tell us they do not feel able, yet, to clearly evaluate the impact on their business model and markets. Furthermore, timelines are challenging – with Level 2 rules not enacted until July 2012 and national transposition measures unlikely to emerge until summer 2012, the lead time to get ready (July 2013 for firms that have not been operating before that date – other firms will have until July 2014) will be tight.

We recognise that AIFMs face many more immediate concerns, ranging from macroeconomic issues to investors’ daily concerns to more immediate regulatory issues, but putting AIFMD on the back burner is no longer an option. Service providers and administrators should already have started planning their response in order to have solutions ready for their clients when they ask, and larger managers should be conducting impact and gap analyses to position themselves for timely compliance with AIFMD.

Please click here for full AIFMD News issue click here


James Greig

PwC (UK)
+ 44 20 7213 5766
  If you have any questions, please contact the author or your local PwC representative.