Capco: Regulatory Monitoring
Posted: 24 September 2013 | Source: Capco
AIFMD – ESMA amends draft RTS
On 2 April 2013, ESMA submitted its final report on the draft regulatory technical standards on types of Alternative Investment Management Funds (AIFM). In this report, ESMA proposed a closed-ended/open-ended distinction for Alternative Investment Funds (AIFs) in order to apply rules on liquidity management and valuation procedures in a uniform matter. However, on 8 July 2013 DG Markt informed ESMA that the RTS are not fully compatible with the AIFMD, inviting ESMA to submit new draft RTS. On 13 August 2013 ESMA complied with this request and submitted new draft RTS for the European Commission’s consideration.
ESMA’s new definition further specifies an open-ended AIF as one that repurchases or redeems its shares or units with its investors, at the request of any of its share- or unit holders. Additionally, these redemption or repurchase requests of shares are not requested to the liquidation phase or wind-down of an AIF, and should meet the requirements as specified in the procedures and frequency in its rules or instruments of incorporation, prospectus and offering documents. Whether an AIF’s units can be negotiated on the secondary market (in which the AIF should not take an open position) should not be taken into account for the open-ended definition.
Concerning specific requirements for liquidity management, these will not only apply fully to managers of open-ended AIFs, but also to managers of closed-ended AIFs which are leveraged. As for the valuation requirements, the only requirement specifically applying to managers of open-ended AIFs relates to the frequency of valuations (at least once per year).
Closed-ended AIFs that do not make any additional investments after 22 July 2013 or whose subscription period for investors has closed prior to the entry into force of this Directive and are constituted for a period of time which expires at the latest 3 years after 22 July 2013, are exempted from the obligation to be authorised or registered under the AIFMD. If the same AIFM manages at least one open-ended AIF, it will need to seek authorisation or registration under AIFMD.
After validation by the European Commission, the amended regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.