The European Fund and Asset Management Association (EFAMA) has commended the European Commission and co-legislators for maintaining the key elements of both the AIFMD and UCITS frameworks during the regulations’ review. EFAMA states that “these frameworks lie at the core of “a well-functioning and resilient funds market”, and that leaving the delegation framework under AIFMD and UCITS largely unchanged will benefit investors — particularly in regard to diversification and access to investment opportunities. Under the frameworks, EU countries must provide asset managers with liquidity management tools within their national legislation. From the selection asset managers must choose at least two, with the decision of when to activate or deactivate the tools left to their discretion. National authorities are able to intervene in the suspension of redemptions and subscriptions only in very limited and specific circumstances, after consultation with the fund manager. Additionally, under particular circumstances the new AIFMD rules allow the appointment of a depositary in a country different to that of the fund, following a case-by-case assessment by the relevant authority. EFAMA approves this decision, stating that the potential option of a full depositary passport across the EU would weaken investor protection. However, the association outlines a number of concerns around the rules. New provisions for loan-originating funds are product-specific, an approach that is not well-suited to a manager directive like AIFMD, the association says. Additionally, the inclusion of elements such as retention requirements in the rules could have a negative impact on risk management. As AIFMD regulates management companies rather than financial products, and as the European Securities Market Authority is currently working on a report on the topic in regard to alternative investment funds and UCITS, EFAMA notes that references to ‘undue costs’ in the rules are unnecessary. Similarly, the inclusion of ‘originate to distribute’ strategies ignores the fact that these are already prohibited by the provisions. Tanguy van de Werve, director general of EFAMA, says: “From the start, EFAMA advocated for a targeted review of AIFMD in order not to undermine a successful framework. We are pleased to see that this has broadly been achieved, allowing the AIFMD and UCITS directive to remain a robust regulatory framework with improved rules. This will help UCITS and alternative investment funds to remain internationally competitive and attractive investment options.”
