EU AIFM Directive

As waves of regulatory reform continue to sweep across the world, those who are most prepared to react and flex their business models will emerge ahead of the competition.

After a year and a half of lobbying and frequently acrimonious debates, the EU Parliament adopted the Alternative Investment Funds Management Directive (AIFMD or the Directive) on 11 November 2010 with the rules to take effect by July 2013.  A little over 1 year later,  the European Securities and Markets Authority (ESMA) published its final advice  to the European Commission ('the Commission') on possible implementing measures (also known as the Level 2 measures) under the AIFMD.  The Commission is currently reviewing the advice and while it will still be able to introduce amendments in areas where it has particularly strong views we expect that substantial proportions of the Final Advice will remain as ESMA has drafted.  It is therefore important that industry continue to engage with the Commission until the final measures are adopted in Q1/Q2 2012.

The Directive continues to cause waves of consternation across the industry in Europe and further afield. It will affect any alternative asset manager, wherever in the world it is based, seeking to raise institutional capital in Europe.  While we recognise that asset managers face many more immediate concerns, ranging from coping with macro-economic events, adapting to new investor demands on a day to day basis and dealing with more immediate regulatory measures (e.g. Dodd Frank and FATCA), putting AIFMD on the back burner for much longer is not an option.  Service providers and administrators will be the first port of call for many asset managers seeking solutions and so should have started planning their responses already. While waiting for the final adoption of the advice may be an option for smaller managers with less complex business models and product ranges, larger managers should already be in the process of completing impact and gap analysis. Regardless by Q2 2012 all managers should be starting preparation for implementation.

We are committed to supporting the Channel Islands finance industries as they face and deal with the challenges presented by the AIFMD and will be proactively supporting our clients through the challenges they will face.

Please contact us should you wish to discuss anything related to this issue or to find out about the latest developments.