AIFMD update: Only a third of EU states have implemented rules
Some 10 months on from the July 2013 deadline for AIFMD, a third of EU member states still have not fully transposed and implemented the legislation at national level, says Bill Prew CEO of Indos Financial.
Ten months ago on 22 July 2013, the Alternative Investment Fund Managers Directive (AIFMD) became EU law. The impact on most existing alternative investment fund managers (AIFM) was deferred by a one year transitional period which ends in two months time, on 22 July 2014. In this update we review developments over the past ten months and what to expect over the next two months and beyond.
EU transposition status
Despite the 22 July 2013 deadline for transposition of the AIFMD into national law, many EU countries did not achieve this deadline. Ten months on, approximately one third of the EU has yet to transpose and implement AIFMD although several of those countries have legislation pending.
Regulatory authorisation status
For existing managers managing an alternative investment fund (AIF) as of 22 July 2013, AIFMD provides a one year transitional period until 22 July 2014, by which time AIFMs must be in compliance with the Directive. AIFMs must submit a complete application to their home state regulator for authorisation as an AIFM by this date. The UK initially took an alternative view that required managers to be authorised by 22 July 2014, but subsequently revised its position and now also only requires a complete application to be submitted by this date.
Across Europe there are expected to be well in excess of 1,200 firms caught by the Directive, with the largest number of firms based in the UK where the FCA is expecting to receive around 800 applications. The actual number of AIFMD approvals across Europe has been low by comparison – a recent report highlighted around 320 firms had been authorised in the UK, Ireland, Luxembourg, France, Germany and a handful of other locations, although many of these are “Small AIFMs” – firms that manage AIFs with less than €100m of gross assets and therefore are not subject to the full gambit of AIFMD. Despite less than two months to go until 22 July, a large number of firms are believed to have not yet submitted an application to their regulator. It now seems inevitable a large number of managers will not be authorised by 22 July and, whilst not required by the Directive, it remains to be seen whether there are unintended consequences for managers that are no authorised.