The European Fund and Asset Management Association says it welcomes the end to the uncertainty that has faced fund managers of all non-Ucits investment funds since the European Commission’s initial proposals for legislation in April 2009, following the approval of the Alternative Investment Fund Managers Directive by the European Parliament.
Efama says the Directive has been erroneously labelled as a hedge fund directive, whereas in reality it also covers real estate funds, investment trusts and non-Ucits retail funds along with many other kinds of nationally regulated investment funds.
The association believes the result of 18 months of negotiations is in many ways a sensible compromise, considering the starting point for negotiations. It remains a very complex piece of legislation which regulators and the industry have to now put into practice. An extensive amount of Level 2 work will follow in the next 12 months.
Efama says it is important that a pragmatic approach is taken, minimising the need for unnecessary restructuring to an industry which is already well regulated at a national level. Ultimately additional costs imposed on investment funds will negatively impact investor returns, which may drive investors to more lightly regulated products with weaker investor protection.
Also very important will be to ensure an adequate transitional period for existing national private placement regimes in the run-up to a European passporting regime for non-EU managers and funds.
Peter De Proft, director general of Efama, says: “It is to be welcomed that a year and a half’s uncertainty about the regulation of all non-Ucits managers and their products is now over and we can move forward. I congratulate both the European Parliament and the Belgian Presidency for their relentless efforts to finalise these negotiations.
“It has to be recognised that the process involved with the AIFMD was unprecedented for the investment management industry. Revisions of the successful Ucits regime followed careful consideration, impact assessment and consultation. These principles of better regulation were ignored regarding the AIFMD and therefore the end result is far from optimal. We sincerely hope that this will prove to be an exception and not the rule for future revisions of EU investment management regulation.”