European Commission proposes further changes to AIFMD

On 4 December 2025, the European Commission (the Commission) published its Market Integration and Supervision Package (MISP), part of its wider Savings and Investment Union (SIU) initiative.

The general objective of the SIU is to "integrate EU capital markets and improve the functioning of the EU single market in financial services for the benefit of investors, businesses and the wider EU economy".

The MISP comprises proposals to amend various existing pieces of legislation, including AIFMD - these are contained in:

• a draft Master Regulation

• a draft Master Directive and

• a proposed Regulation, which would repeal the Settlement Finality Regulation and amend the Financial Collateral Directive.

Note that any changes will need the agreement of the Council of the EU (the Council) and of the European Parliament (EP) and would be in addition to the recent amendments generally referred to as AIFMD 2, the large majority of which come into effect from 16 April 2026. The aim is for the co-legislators to agree a final text in Q2 2026 and to formally approve this by the end of the year.

Some of the proposals, though, (in particular, those which increase the powers of ESMA) are likely to be contentious and it may well be that the expected timetable slips.

For our high-level summary of the changes being proposed to the UCITS Directive, see here.

Overview of changes proposed

The MISP puts forward amendments to the AIFMD in a number of areas with the aim of removing barriers to the cross-border operations of fund managers and their EU groups and eliminating national discretions that could lead to diverging national requirements and supervisory practices.

The proposals include:

1. Marketing

• Article 30a of AIFMD, which covers the pre-marketing regime for EU AIFMs, would be deleted from AIFMD and moved to the Cross Border Distribution of Funds (CBDF) Regulation

• Article 31 (marketing of EU AIFs in the AIFM's home Member State), Article 32 (marketing EU AIFs in a host Member State) and Article 32a (denotification when no longer marketing an EU AIF in a host Member State) of AIFMD would also be deleted - simplified regimes covering these issues would be inserted into the CBDF Regulation

• revisions are also proposed to the CBDF Regulation (a) concerning marketing communications when this has been delegated to a third party and (b) to prevent host NCAs from requiring prior notification of marketing communications

2. Authorisation

• empowering ESMA to standardise and further harmonise the authorisation process for AIFMs by developing
  • Level 2 measures which specify the details of the information which must be included in the application for the authorisation of the AIFM as well as the procedures and timelines to be followed as part of the AIFM's authorisation application and
  • templates, data standards and formats for providing the required information

3. Supervision

• empowering ESMA to

  • carry out annual (or more frequent) reviews to identify large EU groups of asset managers (i.e., those with AuM of at least EUR 300 billion and which operate in more than one Member State). These would be subject to enhanced supervision, the costs of which would be paid for by charging the groups "proportionate fees".   
  • identify and take action to address "diverging, duplicative, redundant and deficient supervisory actions" which hinder the cross-border operations of asset managers and depositaries
  • intervene when ESMA considers that NCAs are not effectively applying EU rules or to directly suspend the cross-border activities of a fund manager or depositary in certain cases
  • clarify that NCAs can refer any disagreements on assessments, actions, or omissions to ESMA to settle.

4. Delegation

• introduction of a passport for EU groups to allow other EU entities within an AIFM's group to carry on activities for the AIFM without this being regarded as delegation - the AIFM would need to inform its home NCA that functions or services are being performed by other entities within the AIFM's group

5. Depositary passport

• establishment of a depositary passport, allowing an AIFM to appoint a depositary located outside its home Member State and permitting depositaries to offer their services on a cross-border basis

6. Rules of Conduct and Prudential Requirements

• Removal of the discretion for Member States to impose national rules of conduct and prudential requirements - ESMAS would develop guidelines which would specify the contents of the rules

Timing

The Commission's proposals are being reviewed by the Council and the EP.

These co-legislators aim to agree a version by the end of Q2 2026, with votes to formally adopt an agreed text expected to be held by the end of the year.

The Master Directive would enter into force on the twentieth day after publication in the Official Journal and Member States would then have 18 months to introduce the relevant changes to their national law.

As a result, it is anticipated that the changes which are agreed will not be effective until Q3 of 2028, though this timing is preliminary and subject to change, depending on how the legislative procedure progresses.