FMA Aufsichtskonferenz 27. September 2010, Wien
Alternative Investment Fund Managers Richtlinie-
aktueller Stand und zukünftige Entwicklungen
Peter De Proft
Director General
"EFAMA Land"
26 Countries:
– 22 EU Members, and – Liechtenstein
– Norway
– Switzerland – Turkey
44 Corporate Members
EFAMA Membership
26 National Associations
• Austria: VÖIG
• Belgium: BEAMA
• Bulgaria: BAAMC
• Czech Rep.: AKAT CR
• Denmark: IFR
• Finland: FFFS
• France: AFG
• Germany: BVI
• Greece: AGII
Hungary: BAMOSZ
• Ireland: IFIA
• Italy: Assogestioni
• Liechtenstein: LAFV
• Luxembourg: ALFI
• Netherlands: DUFAS
• Norway: VFF
• Poland: IZFiA
• Portugal: APFIPP
• Romania: AAF
• Slovakia: SASS
• Slovenia: ZDU-GIZ
• Spain: Inverco
• Sweden: FBF – SIFA
• Switzerland: SFA
• Turkey: TKYD
• United Kingdom: IMA
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EFAMA Membership
44 corporate members
Allianz Global Investors Amundi
Aviva Investors
Axa Investment Managers BBVA Asset Management
Banque Cantonale Vaudoise Asset Management BlackRock
BNP Paribas Investment Partners BNY Mellon Asset Servicing
Capital International Carmignac Gestion Credit Suisse DekaBank
Dexia Asset Management DWS Investment
Eurizon Capital
• Invesco
• IS Asset Management
• JP Morgan Asset Management
• KBC Asset Management
• Lombard Odier Funds (Europe)
• Lyxor Asset Management
• M&G Investments
• Natixis Asset Management
• Nordea Investment Funds
• Pictet & Cie
• Pioneer Investments
• Raiffeisen Capital Management
• Robeco
• Santander Asset Management
• Schroders
• SKAGEN Funds
• Source
• State Street Global Advisors
AIFMD: AIF in Europe
Assets Mill
Eur. % Number of
Funds %
Austria 56,121 3.21% 732 4.53%
Belgium 5,660 0.32% 35 0.22%
Bulgaria 2 0.00% 1 0.01%
Czech Republic 50 0.00% 3 0.02%
Denmark 51,580 2.95% 344 2.13%
Finland 6,819 0.39% 111 0.69%
France 168,000 9.62% 3,670 22.72%
Germany 798,806 45.75% 3,962 24.53%
Greece 1,088 0.06% 8 0.05%
Hungary 2,718 0.16% 85 0.53%
Ireland 151,298 8.67% 1,906 11.80%
Italy 63,805 3.65% 385 2.38%
Liechtenstein 2,300 0.13% 153 0.95%
Luxembourg 248,620 14.24% 3,215 19.91%
Netherlands 12,700 0.73% 64 0.40%
Norway - -
Poland 6,720 0.38% 305 1.89%
Portugal 16,891 0.97% 346 2.14%
Romania 1,795 0.10% 18 0.11%
Slovakia 163 0.01% 5 0.03%
Slovenia 380 0.02% 4 0.02%
Spain 7,368 0.42% 62 0.38%
Sweden 2,869 0.16% 24 0.15%
Switzerland 40,312 2.31% 205 1.27%
Turkey 2,432 0.14% 49 0.30%
United Kingdom 97,494 5.58% 458 2.84%
1,745,990 16,150
Non-UCITS Funds
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AIFMD: EFAMA Priorities
Decision by the Board of Directors in Luxembourg on 4 June 2010:
• First Priority: Delegation
• Second Priority: Freedom of investment for institutional investors
• Third Priority: (Partial) exclusion of funds for up to 3 professional investors
• Fourth Priority: All other requests
AIFMD: Delegation (1/2)
EFAMA Position
• Delegation and Sub-delegation shall be allowed following the UCITS approach: Within Europe, outsourcee may be authorised under
UCITS or MiFID Directive. Delegation is possible to portfolio
managers in third countries established and regulated in accordance with their national law. No requirement to hold AIFM license.
• Procedure should be notification procedure (like UCITS) not authorisation procedure.
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AIFMD: Delegation (2/2)
Belgian Presidency Proposal
• Text very close to UCITS approach
• Procedure is notification before delegation becomes effective
• AIFM must be able to justify its entire delegation structure with objective
reasons
AIFMD : Freedom of Investment for institutional investors (1/2)
EFAMA Position
• EFAMA asks for national private placement rules allowing institutional investors to invest at their own initiative into Third Country AIF.
• The Board has instructed to underline that funds of funds should also be considered as institutional investors.
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AIFMD : Freedom of Investment for institutional investors (2/2)
Belgian Presidency Proposal
• Marketing defined as offering or placement of AIF to investors domiciled in the EU
• No national private placement regimes possible
• Commission to define circumstances under which marketing shall be deemed to be by the AIFM or on behalf of the AIFM
• Investment at the own initiative of the institutional investors seems to be
excluded.
AIFMD: Partial exclusion of funds dedicated to up to 3 professional investors
EFAMA Position
• EFAMA requests at least a partial exclusion from the directive for funds dedicated to up to 3 professional investors.
Belgian Presidency Proposal
• No exclusion for funds dedicated to up to 3 professional investors.
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AIFMD: Valuation (1/3)
Valuation
EFAMA Position:
• AIFM is responsible for the valuation of the AIF assets as well as for the calculation and publication of the net asset value or valuation attributed, delegated or assigned in accordance with the existing national solutions (AIFM in accordance with some national laws not responsible for the proper valuation of AIF assets).
• Requirement of authorisation and supervision of valuator problematic
as it reduces the choice of possible valuators, in particular also in
regard to third countries.
AIFMD: Valuation (2/3)
Valuation
Belgian Presidency Proposal
• AIFM is responsible for and shall ensure proper valuation of AIF assets as well as for calculation of net asset value and publication of that net asset value,
• Internal or external valuer legally or functionally independent from portfolio management
• External valuer may be used and must be subject to mandatory
professional registration and furnish sufficient professional guarantees to undertake functions in question, selected with due care and AIFM must be in position to monitor effectively the activity of the external valuer
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AIFMD: Valuation (3/3)
Valuation
Belgian Presidency Proposal
• External valuer may not be depositary unless it has functionally and
hierarchically separated the performance of its depositary function
from its tasks as external valuer and the potential conflicts of interest
are properly identified, managed and disclosed to the investors of the
AIF.
Depositary
EFAMA Position:
• Eligible institutions : a majority of EFAMA members is in favor of limiting eligible institutions to Credit institutions and MiFID firms authorized to provide ancilliary services of safe-keeping and administration and subject to capital requirements.
• Delegation, but also sub-delegation, of custody functions should be allowed (subject to proper due-diligence process)
• Liabilities:
– General principle of liability to be based on UCITS standard of unjustifiable failure to perform its obligations (no strict liability regime for depositaries)
– Depositaries should not be held liable for losses arising out of Force Majeure (or equivalent concept)
AIFMD: Depositary (1/3)
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AIFMD: Depositary (2/3)
Depositary
Belgian Presidency Proposal:
• Eligible institutions: also open to other categories of institutions
already authorized to provide depositary services at the time of entry into force of AIFMD
• Clarification of rules regarding country of establishment of depositaries for non EU-AIFs (linked to third country issue)
• Delegation and sub-delegation of custody function allowed if objective
reason for delegation and subject to adequate structures and ongoing
monitoring of sub-custodians
AIFMD: Depositary (3/3)
Depositary
Belgian Presidency Proposal:
• Liabilities – general principles:
–
Depositary liable to AIF and its investors in case of loss of financial instruments held in custody – obligation of restitution without undue delay (except if loss result of
external event outside depositary’s reasonable control)–
Depositary also liable for any other losses resulting of its negligent or intentional failure to perform its obligations
–
Depositary also liable in case of delegation of custody function, but possibility for depositary to discharge its liability on sub-custodian through written contract with AIF
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AIFMD: Remuneration
Remuneration
• Inserted into AIFMD in ECON and Council Drafts as consequence of Financial Crises
• ECON Secretariat suggests drafting following CRD 3 rules
• Commission suggests identical rules for AIFMD and UCITS V
• EFAMA Position: Provisions need to reflect business model of asset
management industry
AIFMD: Industry Reaction (1/5)
- Uncertainty over content and timing of AIFMD (Level I) - Blocking Factors Private Equity and Third Countries
- Important delegation of competences to Level II (Commission and ESMA) – uncertainty over content and timing of Level II
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AIFMD: Industry Reaction (2/5)
Newcits
• Since Madoff, Lehman and the financial crisis more investors are looking for fund structures that will provide them with return ON their assets, but also return OF their assets.
• The UCITS III framework has a proven safety of assets framework what provides investors with liquidity, transparency, risk
management and control, but flexible enough through the use of
derivatives to create more than just long only products.
AIFMD: Industry Reaction (3/5)
Newcits
• The uncertainty surrounding the implications of the future European regulation of alternative investment managers also contributed to the convergence process between hedge funds and UCITS.
• UCITS Directive does not distinguish between different types of UCITS fund category. Newcits cannot be considered as an
independent category of fund; they represent instead a specific niche in the UCITS market and regulatory space.
• Risk management has come to the top of the agenda.
• It is necessary to protect the UCITS brand against potential collateral damages.
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AIFMD: Industry Reaction (4/5)
Source: EFAMA and PwC
AIFMD: Industry Reaction (5/5)
Relocation
- Relocation of products for the European market to Europe
- Relocation of products and managers for non-European markets to Third Countries
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Reaction of Foreign Regulators:
• Questions regarding suitability of “Newcits” for retail investors
• Negative Impact of “Newcits” on well established UCITS brand
• Retaliation measures because of uncertainty over AIFMD
AIFMD: Regulator Reaction
UCITS IV and UCITS V are examples of cross border fertilization between industry and
legislators!
AIFMD started on a wrong footing from the word go!
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