The European Commission has recently published a Report on the operation of the Alternative Investment Fund Managers Directive (AIFMD). The report, which has been prepared by KPMG, represents the first step in the AIFMD review process.
In response to the financial crisis of 2008, which exposed a series of vulnerabilities in the global financial system, the European Parliament and the Council of the European Union adopted the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD). AIFMD aimed to extend appropriate regulation and oversight to all actors and activities that embed significant risks, by introducing harmonised requirements for Alternative Investment Fund Managers (AIFMs).
The general objective of AIFMD is to create an internal market for EU and non-EU Alternative Investment Funds (AIFs), and a harmonised and stringent regulatory and supervisory framework for AIFMs. Specifically, it seeks to ensure that all AIFMs are subject to appropriate authorisation and registration requirements; that there is proper monitoring of macro- and micro-prudential risks and a common approach to protecting professional investors; that there is greater accountability of AIFMs holding controlling stakes in non-listed companies; and the development of the Single Market in AIFs.
Under Article 69 AIFMD, the European Commission (EC) had to start by 22 July 2017 a review of the application and scope of the Directive, its impact on investors, AIFs and AIFMs, within the EU and elsewhere, and the degree to which its objectives have been met.
In this context, KPMG1 has been mandated by the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (CMU) to conduct a general survey and to carry out an evidence-based study. This survey and study resulted into the Report on the operation of the AIFMD, which was publised by the EC on 10 January 20192.
On the basis of the evidence retrieved and analysis undertaken, as described in the Report, it is clear that AIFMD has played a major role in helping to create an internal market for AIFs and a harmonised and stringent regulatory and supervisory framework for AIFMs. Moreover, most areas of the provisions are assessed as having contributed to achievement of the general, specific and operational objectives, to have done so effectively, efficiently and coherently, to remain relevant and to have EU added value. There are, however, some provisions that have not contributed, or may be counter to, the achievement of these aims – particularly, but not exclusively, in relation to the principles of effectiveness and efficiency. A small number of areas need further harmonisation in order to prevent rule arbitrage and to ensure a common level playing field. The assessment revealed some crucial points which may potentially be the focus of further consideration by the EC. Some selected examples are:
The report represents the first step in the AIFMD review process. The EC will continue its review of the AIFMD and next year will report to the European Parliament and the Council, as required by the Directive.
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