Transcript Slide 1

Proposal for a Directive on Alternative
Investment funds managers (AIFM)
CEPS Conference on the AIFM Directive
Bruxelles, 29 June 2009
Political context
• G20 Conclusions:
“HF or their managers will be registered and will be
required to disclose appropriate information on an
ongoing basis to supervisors or regulators, including on
their leverage, necessary for the assessment of the
systemic risks that they pose individually or collectively.
Where appropriate, registration should be subject to a
minimum size. They will be subject to oversight to
ensure that they have adequate risk management. …”
• Commitment made by the Commission in its 4 of March
communication on “driving European recovery”
• 2008 EP reports (Rasmussen and Lehne)
Guiding principles

AIFM activities are essentially cross-border:
national rules not enough; need for EU common
approach.

This proposal is the first attempt in any
jurisdiction to create a common framework for direct
regulation and supervision of the alternative
investment industry. Important to get the balance
right – avoid “overshooting” and protectionism.

Avoid risk of depriving EU economy from much needed
funding. Risk of EU AIFMs and investors leaving EU.
Objectives
 AIFM to be authorised and subject to ongoing supervision; and
key services (asset safe-keeping, valuation) performed subject to
strict controls
 Enhanced transparency and monitoring of macro-prudential risks
at national and European level, share information between Member
States
 Improved risk management and organisational safeguards to
mitigate micro-prudential risks
 Enhanced investor protection
 Improved transparency and accountability to stakeholders of
AIF controlling companies
 Development of single market for alternative investments
 Ensure an appropriate treatment of third-countries entities
Scope
 Large but adapted to the different business
models:
 All managers are covered, no asset class definitions, but
important indirect effect on funds (AIF) operation
 Not covered if below 100m euros threshold or 500m euros (if
no leverage and lock-in periods of more then 5 years), national
rules apply (possibility to opt-in)
 Common set of rules with specific chapters for AIFM using
leverage or taking controlling stakes in companies.
Differentiation principle within common provisions.
Architecture of draft proposal

Authorisation procedure for all AIFM within scope

Common organisational and operating provisions applying to all
AIFM within scope (conflict of interest, risk and liquidity
management, capital, organisational requirements, delegation)

Specific provisions applying to AIFM giving rise to particular risks

Rights of AIFM to manage funds and to market to professional
investors throughout the EU

Third country chapter

Supervisory cooperation – exchange of information on systemic
issues
Third country chapter
 An AIFM will be able to market 3rd country AIF only if:
 Agreement based on OECD Model Tax Convention with MS of
the investor
 Presence of a depositary and independent valuator in the EU (in
case of delegations to a 3rd country, strict conditions are met).
 Possibility for Home Member State to take more time to take
decisions allowing the marketing of the fund.
 MS can authorise 3rd country AIFM if:
 regulation and supervision of 3rd country are equivalent
 3rd country provides effective market access for EU AIF/AIFM
 Information sharing about AIFM and AIF is ensured
 Co-operation agreement on systemically relevant institutions and
tax issues in place
Calendar
• 29 April 2009: adoption of the Commission
proposal
• 26 May 2009: first Council working group
meeting, other meetings on 17 June, 6 and 23
July
• 7 June 2009: EP election → appointment of a
rapporteur (date ?)
• Priority file for the Swedish Presidency