22 July 2013 is a day that will either unleash great potential from alternative investment funds and managers, or result in a regulatory quagmire.
And yet, the clock is ticking.
The European Securities and Markets Authority (ESMA) announced its agreements with the Channel Islands domiciles Jersey and Guernsey as recently as the end of May.
Designed as Memoranda of Understanding, the agreements cover hedge, private equity and real estate funds, and were negotiated by ESMA on behalf of the 27 EU member states as well as Croatia, Iceland, Liechtenstein and Norway. Both Guernsey and Jersey will henceforth have to exchange information, agree to cross-border on-site visits and mutual assistance in enforcement of supervisory law - applicable to alternative fund managers that manage or market alternative investment funds in the EU, and EU AIFMs that manage or market alternative investment funds in these domiciles.
Mike Jones, deputy director of Securities at the Jersey Financial Services Commission, said: "It has always been Jersey's intention to be in the first tranche of jurisdictions to sign this AIFMD cooperation agreement and I am delighted that, following months of preparation work and constructive engagement with ESMA and the regulators of individual EU Member States, that agreement is now in place. It puts Jersey in a very strong position and ahead of schedule in terms of the AIFMD introduction date on 22 July."
In Italy, the consensus in the alternatives sector seems to be that the impact of the Directive on its alternatives sector will be limited, though they will face increased competition.
It is too early to form an accurate assessment, as the Directive was yet to be transposed into national law as of mid-June. However, Italian law already requires alternative fund managers to be authorised and supervised, like their mainstream counterparts.
Over the years, regulators have worked with the sector and the government to create a regime that gives priority to high investor protection standards, especially as regards the retail sector, over operational efficiency.
Nevertheless, the introduction of AIFMD is causing some concern among those,
mainly politicians or regulators, who fear that investor protection could be diminished. Alternative fund managers, on the other hand, view the level playing field being introduced across the EU as an opportunity for expansion, while recognising that the Directive also opens Italy to much more competition.
Assogestioni, the Italian fund managers' trade body, sees business opportunities for Italian asset managers. The body says the provisions of the Directive are a good balance between the needs of the asset managers to operate effectively, and the need for more effective risk control, resulting in a system with greater overall stability.
Meanwhile managers get to compete across Europe on a level playing field, according to a harmonised set of rules, something Italian fund managers have always lacked, and which could unlock potential growth of the Italian fund management sector.
Critics point to the political aspect of the Directive, saying the rules were drafted too strictly, in a way that suggests alternative fund managers were somehow responsible for the global crisis. For them, tighter regulation of the alternatives sector is not the correct response to the crisis, and no guarantee that it will prevent another.
Assogestioni presented a study to the government late last year expressing fears that reform of the national regulatory framework along the lines of the EU requirements could weaken investor protection by modifying current national legislation.
Other concerns include implementation costs; maintaining the separation of marketing from the management of funds; and maintaining the role of the banks as a depositor providing an independent calculation of funds' NAVs.
As regards investment products, Assogestioni sees the Directive as an ‘ideal' opportunity to make the Italian market more attractive should it enable greater freedom in the choice of investment areas for retail investors.
Other recommendations include: the wider use of leverage; speculative funds to be made more accessible to a wider range of investors, for example by eliminating the current minimum subscription levels; and an overhaul of the rules governing real estate funds.
Roberta D'Apice, head of legal services at Assogestioni, and author of the report, said: "The national authorities are taking careful note of our recommendations, and discussions are ongoing. It is too early to say what will be agreed. The deadline of 22nd July will most probably be missed, but I expect the Directive to be transposed into law soon after."
She adds: "The sector is not expecting great changes, as we are already broadly aligned [with the needs of the Directive]. There will be some changes, in particular as regards the increased competition that our sector will face, once the Italian market is opened up [to foreign competition]."