Alfi to focus on explaining AIFMD Level 2 through Q1

Marc Saluzzi, chairman of the Association of the Luxembourg Fund Industry (Alfi), says the organisation is to focus much of its attention in coming weeks on ensuring the industry gains full understanding of the implications of the implementing Level 2 measures of the AIFM Directive.

Previously expected in September, the final Level 2 text was delayed before finally being delivered by the European Commission on 19 December 2012. This was not before time, Saluzzi said, in light of the need to transpose the Directive into national law by member states by July 2013. The delay had caused mounting concern in the alternative investment fund industry.

That said, a considerable amount of detail had leaked through the last quarter of 2012, meaning most of the provisions were not unexpected. Final delivery is, however, the easy part, Saluzzi (pictured) added.

“Now the hard work starts. First to make sense of those measures, and then to see how we can implement them in a pragmatic manner, to ensure alternative managers can develop and commit new business to our Luxembourg fund centre.”

“That does not mean we agree with the content of those Level 2 measures. We were extremely keen to understand what the Commission had done with a certain number of provisions to do with the depositary liability regime and the delegation regime. Clearly, what we have seen is that the Level 2 is not going in the right direction here, but we have to accept them now and move on, and make some sense of it, and provide the solutions that will help alternative fund managers to develop their business.”

As part of its information campaign around AIFMD, Saluzzi confirmed that Alfi is set to host a conference day on 31 January titled “AIFMD Level 2 Implementation Measures”. This is intended as an opportunity for the Luxembourg fund industry to discuss and disseminate further information and understanding of the practical implications of the regulatory changes as finally proposed.

Luxembourg funds

In Luxembourg itself a draft funds law was submitted to Parliament in August 2012. This draft was complemented by two specific provisions: one regarding the introduction of limited partnerships, the second regarding the treatment of carried interest.

The Parliament launched a consultation, that is “more or less done”, Saluzzi said. Subsequently, the final draft, including any changes in response to the comments received during the consultation process, would be put to a final vote, expected by the end of March.

This would put Luxembourg among the first member states to transpose the Directive into law, but in that sense continues a trend in the jurisdiction for early implementation of EU law.

There is still a theoretical risk that the Level 2 measures could be rejected by the European Parliament or the Council of Ministers, who are now themselves reviewing the proposals. However, they do not have the opportunity to propose amendments, but rather can only propose rejection, effectively scrapping the Directive. This is not likely, Saluzzi said.

There is other scope for changes in future. For example, ESMA, the European Securities and Markets Authority, could get a mandate from the European Commission or Council of Ministers to “fine-tune” subsequent implementation on the basis of what it observes via the initial implementation of the Directive in the various member states.

“It is clearly indicated that in one or two years from now, ESMA could, based on observations, come up with remarks regarding the implementation of the Level 2 measures as they relate to delegation. As a result they could still have an impact on those measures. But in the near future I don’t expect anything else in regard to the Level 2 measures. We’ll have to take stock of them, make sense of them, and help alternative fund managers to find solutions to implement them in the most pragmatic manner.”

“That is really the focus for the time being of Alfi.”


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