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03 September 2009

Notes by the Swedish Presidency on the AIFM directive

A number of delegations are not satisfied with third countries’ restrictions and supervision.

During the first meetings of the Working Party, and as a result of written comments received from member states, the Presidency has identified a number of key issues in the AIFM proposal that need to be addressed.

The directive covers managers of a very heterogeneous group of funds with different business models, risks, redemption policies etc. Many delegations have therefore called for a refinement in the differentiation of the requirements as they pertain to different funds. There are indeed provisions in the proposal which, from a technical point of view, do not seem relevant for all funds, especially those without redemption rights. Here changes can be made within the specific articles by further specifying their scope of application.
The main concerns raised by the delegations are the followings:
·         Exemptions in general: clarify whether certain types of managed accounts and/or managed futures funds should be exempted or not; clarify whether self-managed funds in general should be exempted or not.
·         The de minimis thresholds: how the de minimis thresholds should be applied, especially concerning the calculation of the portfolio values and the treatment of AIFM which manage portfolios where the value fluctuates and is sometimes above and sometimes below the thresholds and the need to remove these thresholds.
·         Capital: Several delegations have pointed out the differences in relation to the corresponding provisions in the UCITS IV Directive and have asked for alignment with that Directive.
·         Valuation: a number of delegations are not satisfied with the proposal that the valuator must be independent of the AIFM.
·         Depositary: although delegations welcome a strengthening of investor protection in this area, many have expressed serious doubts about especially limiting eligible depositaries to EU credit institutions and also about the proposed rules on liability.
·         Leverage: the concerns relate especially to the definition and calculation of leverage, the reporting to the competent authorities, the limits to be set by the Commission and the limits to be set in exceptional circumstances by the competent authorities.
·         Third country issues: Although proposals on how to solve these issues vary, there seem to be an overwhelming majority of member states which are against imposing undue restrictions on investment opportunities for especially institutional investors, as well as creating other barriers to global capital flows.
·         Supervision: a number of delegations have expressed concerns about the proposed articles on supervision, and have asked for alignment with other directives. This relates inter alia to the absence of powers for the host authority in the proposal. It also concerns the issue of which authority should be responsible for the supervision of the AIF and what rules should apply in this situation (including marketing to retail investors).

© Council of the European Union

Documents associated with this article

Presidency notes- AIFM st12864.en09.pdf

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