European countries miss AIFMD deadline

29 July 2014   Category: News, Global, Europe   By Derek Au

A number of European countries have failed to fully comply with the Alternative Investment Fund Managers Directive (AIFMD), as required before the deadline of July 22, according to an industry association.

“The implementation of the AIFMD is incomplete and significant uncertainty remains,” said the Alternative Investment Management Association (AIMA), a global hedge fund association which has more than 1,400 corporate members worldwide based in over 50 countries.

The association said this could prevent investors from accessing alternative investment funds, as managers may not be able to conduct marketing campaigns in certain countries. According to AIMA, countries including Iceland, Lithuania, Norway, Poland, Portugal, Romania, Slovenia and Spain, did not meet the deadline.

“There is uncertainty over how certain measures are being interpreted and applied by different countries, which has left certain key relationships between managers and service providers in a state of flux,” said AIMA. The association added that the regulatory reporting templates have not been finalised, leaving managers little time to build out their IT systems. It also believes a lack of consistency between reporting requirements in different European countries would push up compliance costs.

“Unfortunately, like with many pieces of regulatory reform we have seen negotiated and applied in recent past, AIFMD implementation has proven to be more complex than originally expected, not only for the industry but also for the regulatory community. We are heartened to see that European policymakers are starting to recognise that core reform measures need more time to be put in practice and that more generous transposition deadlines are being considered,” said AIMA chief executive officer Jack Inglis. Despite the delay, he added that the industry has made enormous progress and invested substantial resources to comply with the AIFMD.

The AIFMD introduces a new passport system for the marketing of alternative investment funds in the European Union.

However, there are indications that fund firms are still not ready for AIFMD. According to a survey by BNY Mellon, 44% of fund managers had not received authorisation from their local regulator by the deadline. The survey identified several areas managers fell short of the required standard. For example, 31% of them have not fully implemented risk and control systems, 36% have yet to update fund documentation, and 38% have not appointed a depositary.