The European Commission has published the report required by the AIFMD on the effects the Directive has had on the alternative investment funds industry. Its review covered 13 Member States, selected to give a broad range of geography and market sizes. It included the main AIFM jurisdictions, jurisdictions known to have harsh NPPRs and smaller states. Key observations are:
- total net value of AIFs and cross-border distribution of them have both approximately doubled since 2011 (when the AIFMD was adopted – although it was not implemented for another couple of years), and the AIFM passport is considered to be an important factor in this;
- the passport is impaired by national gold-plating, differences in national marketing rules, variations in national interpretation and the limited scope of the passport;
- smaller AIFMs cannot use the passport, if they are unable to comply with the requirements to a a full scope AIFM;
- semi-professional and retail investors can be approached only under varying and often restrictive national rules;
- retail investors tend mainly to be offered in-house funds by banks and insurers, and do not get offered broad range of products;
- NPPRs have in some cases created opportunties but in others have caused an unlevel playing field between EU and third country AIFMs;
- the lack of a depositary passport is concerning, and risks concentration of risk in a limited number of depositaries;
- the disclosure rules have on the whole been successful although there are some concerns around the binary nature of the valuation rules and disclosures;
- there is no evidence to suggest a need for the adjustment of the thresholds of AUM in terms of monitoring of systemic risk, and the toolkits available to national regulators are useful;
- leverage calculation methods are suitable, although other factors may mean they will be amended;
- while the remuneration rules seem to have worked well, there is some call for them to be aligned with the CRD requirements;
- private equity fund managers find significant barriers to cross-border marketing.
The Commission is now assessing whether it should make proposals for change to the AIFMD.