Monthly Archives: May 2013

Bill Prew to speak at IFIA and 100WHF seminars

INDOS Financial’s Bill Prew will be speaking at the Irish Funds Industry Association annual conference on June 12, 2013 in Dublin. Bill will participate in the panel discussion on developments in Product Development and Distribution.

Later that day Bill will also be discussing the impact of European regulatory developments at a seminar hosted by law firm Macfarlanes in London for members of the 100 Women In Hedge Funds network group.

More details of the IFIA conference can be found by clicking on this link. 

AIFMD Countdown – May 2013

There are now just over 60 days to go until the 22 July 2013 AIFMD implementation date. It has been a busy month since the last update.

In the UK, where most hedge fund managers manage non-European hedge funds domiciled in the Cayman Islands, there are signs that many managers plan to make use of the UK’s flexible interpretation of AIFMD’s one year transitional provision. Managers appear to accept that this might be at the expense of not being able to market their funds through private placement to certain non-UK, EU professional investors for several months. In return, it will allow managers more time to implement the directive, let others learn from being ‘first movers’, and avoid the remuneration provisions until 2014. Having said this, the FCA confirmed in a joint AIFMD Town Hall meeting with HM Treasury on Friday 17th May that some 180 – 200 UK managers had still indicated (in response to the March AIFMD survey) they intended to adopt early. The FCA also confirmed it will issue the UK variation of permission application forms within the next two weeks, and will endeavour to turn around applications from early adopters within one month.

There has been no further guidance from ESMA, including guidance anticipated around the Annex IV reporting requirements. In the UK, HM Treasury has issued amended AIFMD regulations. Third country AIFM’s, such as US managers, will now also be able to make use of the one year transitional period for marketing. In addition, post the transitional period, marketing to UK investors will now be subject to FCA notification, not pre-approval, requirement. The UK will no longer apply AIFMD to sub-threshold managers. In Germany, it has been reported marketing via private placement will still be possible, contrary to previous expectations, subject to registration with the local regulator, BaFIN.

Switzerland and Brazil are still the only countries to have agreed AIFMD co-operation agreements. There are reports that a number of offshore jurisdictions, including the Cayman Islands, are meeting with ESMA later this month with a view to entering co-operation agreements before 22 July.

Prime brokers and depositaries continue to negotiate a ‘Day One’ AIFMD depositary model for EU AIFs. Under AIFMD a depositary is permitted to delegate its functions and to contractually discharge its liability to a delegate provided there are objective reasons for doing so. The Central Bank of Ireland has this week indicated that there will be high bar to justify contractual discharge. HM Treasury has removed an element of the gold-plating around the so-called ‘depositary-lite’ duties, which impact the large number of EU AIFM of non-EEA AIF marketed to EU investors. More than one firm can now be appointed but it appears any UK entity may require an appropriate FCA depositary authorization.

The FCA was due to issue its third consultation paper in May and also consult on the Remuneration Guidelines. The FCA confirmed in the Town Hall meeting that they are now focused on their AIFMD Policy Statement which they still aim to publish during June. There was no firm indication of timing in relation the remuneration consultation but, from other reports, this could now be July at the earliest.

Finally the Irish Central Bank has now opened its doors to AIFM applications for Irish managers and reiterated its commitment to authorizing early adopters by 22 July.

As with all of AIFMD, the devil is in the detail and a lot of uncertainty remains.  But with the July deadline looming, there is a flurry of activity and the mist is at least starting to clear.

This update can also be read on the COO Connect website by clicking here.

HM Treasury response to consultation & revised AIFMD regulations

HM Treasury has published its response to the AIFMD consultation which closed in February. Revised AIFMD regulations accompany the announcement. At a high level, the documents contain some welcome developments (below) but concern remains about gold plating of the so-called ‘depositary-lite’ requirements for EU AIFM marketing non-EU AIF to EU investors.

  • HM Treasury no longer plan to impose additional requirement on sub-threshold managers.
  • EU AIFM seeking to market offshore funds to UK investors will just need to notify the FCA rather than seek its approval before marketing.
  • Confirmation that third-country, non-EU AIFM will be able to take advantage of the 1 year transitional rules when marketing to UK investors.

The documents can be viewed on the HM Treasury website by clicking here.

A separate article covering the amended regulations, including comments from INDOS Financial’s Bill Prew, was published by Hedge Compliance. Click here to read the article (you will need to be registered)

FCA update on early AIFM authorisation

The FCA has confirmed it is aiming to provide further information during May on the process for authorisation to the specific firms identified by their AIFMD Survey as needing early authorisation in order to prevent disruption to their business. They continue to work on the authorisations process and will provide details to all other firms in June to explain the process for making an application on or after 22 July 2013.

The FCA goes on to reference the recent HM Treasury confirmation that they are proposing to include a transitional provision enabling some depositaries to act for AIFs prior to obtaining the new Part 4A permission of “acting as trustee or depositary of an AIF”. Further details will be announced, but is unclear whether this transitional provision will apply to existing trustee businesses or potential new depositary businesses.

The FCA also notes its communication to the industry around the authorisation process is later than anticipated due to the need to gain clarity over certain key decisions from Europe.

To read the full text click here.