AIFMD review

Summary

The Irish funds industry is preparing for a revision of the AIFMD framework

Background

Article 69 of AIFMD requires the European Commission to review the application and the scope of AIFMD, by assessing the Directive's impact on investors, AIFs, AIFMs in the EU and in third countries in order to establish how far AIFMD's objectives have been achieved. In June 2020, the European Commission submitted its report to the European Parliament and the Council on the scope and the application of the AIFMD. The report concluded that while the AIFMD has:

• contributed to the creation of the EU AIF market,
• provided a high-level protection to investors; and
• facilitated monitoring of risks to financial stability,

there are a number of areas where the legal framework could be improved.

The next stage of the review is a public consultation, which will run until 29 January 2021. The consultation’s 102 are divided into seven sections:

Functioning of the AIFMD regulatory framework, scope and authorisation requirements [1 – 20]

The AIFM passport is the central pillar of the AIFMD regulatory regime, and this section looks at the specific regulatory aspects where their potential refining could enhance utility of the passport.

Investor Protection [21 – 46]

This section looks at:

• investor categorisation (specifically, the proposal in the MiFID2 consultation to create a new category of “semi-professional” clients;
• the conditions that would make it possible to make AIFs available to a larger pool of investors while considering their varying degrees of financial literacy and risk awareness.

International Relations [47 – 55]

Considering the global nature of financial services, the AIFMD interacts with third country regulatory regimes. This section seeks views on where to strike the balance of having a functioning, efficient AIF market and ensuring that it operates under the conditions of fair competition without undermining financial stability.

This section also contains questions on delegation, which was one of the main topics of the GSMA letter.

Financial Stability [56 – 85]

One of the main objectives of the AIFMD is to enable competent authorities to mitigate systemic risks building up in financial markets.

To assist the competent authorities, the AIFMD subjects AIFMs to periodic reporting obligations and equips the regulators with market intervention powers to mitigate negative effects to the financial stability that may arise from the activities on the AIF market.

This section invites opinions whether the intervention powers and a tool-kit available to the relevant supervisors are sufficient in times of severe market disruptions.

Investing in Private Companies [86 – 89]

The AIFMD rules regulating investing in private companies aim to increase transparency and accountability of collective investment funds holding controlling stakes in non-listed companies.

This section asks whether the current provisions are sufficient for this purpose or if there are other ways to achieve those objectives more efficiently and effectively.

Sustainability ESG [90 – 95]

This section looks are how AIFs can participate in areas of responsible investing. It asks whether

Miscellaneous [96 – 102]

The final section of the consultation contains questions on the competences and powers of supervisory authorities, and seeks any other comments of the stakeholders on the AIFMD related regulatory issues from the preceding sections.

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