September 11, 2020 – On August 18th, the European Securities and Markets Authority (ESMA) published a letter that was sent to the European Commission (EC) on recommendations to incorporate in the Alternative Investment Fund Managers Directive (AIFMD).
The ESMA and EU national competent authorities have identified areas of improvement to AIFMD. The review provides the base for their recommendations to be enacted.
The key changes proposed by ESMA in the letter include:
- Harmonisation of the AIFMD and the Undertaking Collective Investments in Transferable Securities (UCITS) regimes, e.g. diverging requirements for risk management reporting should be addressed;
- Clarification of permissible business activities, legal uncertainties and consistency in UCITS Directive, AIFMD and MiFID, e.g. whether real estate qualify as financial instrument;
- Clarification of several definitions, e.g. professional investor, semi-professional investor, Alternative Investment Fund (AIF), reverse solicitation, significant influence;
- Increase in digitalised communication;
- Provision of additional Liquidity Management Tools (LMTs) and
- Extend AIFMD supervision to sub-threshold Alternative Investment Fund Managers (AIFMs)
The key changes proposed by ESMA related to regulatory reporting include:
- Amendment of leverage calculation methodologies
- Requirement of Legal Entity Identity (LEI, ISO 17442) for all AIFMs and their AIFs to cross-analyse data between several reporting regimes (EMIR, SFTR, MiFIR)
- Completeness of assets and liabilities (holdings)
- Removal of duplicative information and request data in their operational data structure and
- Incorporation of various metrics regarding Environmental, Social and Governmental (ESG) aspects into mandatory reporting
As a SaaS provider for the AIFMD Annex IV reporting, we welcome the recommendations. Our team is ready to incorporate all changes into our acarda regulatory reporting tool ´arep´.
Christian Engel, PhD