EU regulator calls for changes to AIFMD rules as review begins


The EU’s Alternative Investment Fund Managers Directive (AIFMD) is up for review and the European Securities and Markets Authority (ESMA) has now issued an open letter about the key areas that may need some attention.

Since AIFMD was launched in 2011 the EU’s securities markets regulator and national competent authorities (NCA) across the trading bloc have used it to regulate the alternative investment market.

It is on the back of that experience that ESMA is now highlighting areas that the regulator feels that the European Commission must focus on during the review.

ESMA suggested the review was a great opportunity to bring about better harmonisation between AIFMD and the Undertakings for Collective Investment in Transferable Securities (UCITS) directive.

For instance, it said that the two regulations have different levels of granularity in terms of risk and liquidity management requirements.

The regulator also called for clarity in how different companies should be regulated in terms of UCITS, AIFMD and the second Markets in Financial Instruments Directive (MiFID II).

“In particular, NCAs expressed divergent views on whether AIFMs (and UCITS management companies) could be permitted to perform business activities other than those explicitly listed in the aforementioned provisions,” wrote Steven Maijoor, chair of ESMA, in the open letter.

“As a result of these interpretational issues, the list of permissible business activities of AIFMs (and UCITS management companies) in some Member States is broader than in others.”

Having noticed how the availability of additional liquidity management tools differed across different EU jurisdictions, ESMA urged the commission to ensure that these would be available evenly across the EU.

ESMA also called for proposed changes to AIFMD to clarify the reporting and data use rules.

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