While the European Commission considers that the Alternative Investment Fund Managers (AIFM) Directive has broadly played its role, it does not rule out the possibility that new rules will be needed in the future to ensure that the Directive remains fit for purpose. This is what emerges from the Commission’s evaluation report on the Directive published on Wednesday 10 June.
Adopted in the wake of the global financial crisis, which had highlighted certain weaknesses in international financial markets and their regulation, the Directive came into force in 2013. In particular, it requires AIF managers to take measures to manage their risks and ensure full transparency on the activity of the AIF they manage and allows them, with a single authorisation, to manage these funds and market them to professional investors throughout the EU.
The report notes that, since the adoption of the Directive, the total volume of AIF’s net assets has more than doubled from 2,300 billion euros to 5,900 billion euros. AIF’s cross-border distribution almost doubled between June 2017 and October 2019, rising from 3% to 5.8% in volume of these funds. According to the Commission, these figures confirm the important role of the passport introduced for AIF managers.
In addition, the Commission notes an increase in AIF sales and increased participation by retail investors in several Member States. In its view, the depositary regime, conflict of interest rules and disclosure and transparency requirements have contributed to investor confidence.
Nevertheless, the report points out that the effectiveness of the passport for AIF managers is impaired by national gold-plating, divergences in the national marketing rules, varying interpretations of the Directive by national supervisors and, finally, its limited scope.
Thus, the Commission concludes that further action may be needed at EU level to deepen the EU AIF market and to be able to respond to technological developments, so that the Directive remains fit for purpose.
See report: https://bit.ly/37nJnGF (Original version in French by Marion Fontana)