The directive governing the activities of alternative investment fund managers (AIFM) has produced positive results, even if further harmonisation of the fund marketing passport could be envisaged, says an external evaluation report published by the European Commission on Thursday 10 January.
In force since 2013, the Directive (2011/61) aims both to create an internal market for European and non-European alternative investment funds - such as equity and bond funds, hedge funds and private equity funds - and to regulate the activities of the managers of these funds (see EUROPE 10254, 10244).
The report, prepared by KPMG, considers that most of the provisions of the Directive have fulfilled their objectives, and clearly states that the AIFM Directive has played a major role in establishing a single market for hedge funds, as well as harmonised and demanding rules.
Nevertheless, some weaknesses and shortcomings are highlighted, in particular with regard to the effectiveness and efficiency of European rules.
In particular, the report highlights the need for further analysis of divergent interpretations of the rules by the competent national authorities, with most industry stakeholders surveyed indicating that a small number of areas would require further harmonisation to avoid regulatory arbitrage and ensure a level playing field.
Concerning the European passport which allows AIFM established in Europe or from third countries to market their products to professional investors throughout the EU (see EUROPE 10254, 10244), statistics contained in the report indicate that the management passport is functioning properly. This is less the case for the marketing passport, which suffers from the lack of harmonisation between countries.
In addition, while AIFM must send large volumes of data to the authorities of their Member State, the report notes a lack of uniform understanding on the part of AIFM as to the information to be transmitted, as well as the existence of redundancies with other European regulations on transparency obligations.
This report is only the first step in the Commission's review of the AIFM Directive. As required by the Directive, the latter will report next year to the European Parliament and the Council of the European Union. See: https://bit.ly/2D3fvlF. (original version in French by Damien Genicot - intern)