On 10 June 2020, the European Commission (the Commission) issued a Report to the European Parliament and the Council evaluating the application and the scope of Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD).
The AIFMD seeks to achieve a coherent supervisory approach to the risks of the financial system, to provide high-level investor protection and to facilitate European Union (EU) alternative investment funds (AIF) market integration. Alternative investment funds managers (AIFMs) are required to take measures to manage risks and ensure the requisite transparency regarding the activities of their managed AIFs while being able to manage and market AIFs to professional investors across the EU with a single authorisation.
This Report is prepared in accordance with Article 69 of the AIFMD. The Commission is required to review the application and the scope of the AIFMD with an emphasis on the experience acquired in applying the Directive. It is necessary to assess the Directive’s impact on investors, AIFs, AIFMs in the EU and in third countries in order to establish the degree to which the objectives pursued by the AIFMD have been achieved. This report fulfils the mandate of the Commission to provide the European Parliament and the Council with an assessment of the functioning of the AIFMD.
Assessing the application and the scope of the AIFMD is a significant pillar of the Capital Markets Union (CMU) facilitating the improved monitoring of risks to the financial system and the cross-border increase of capital for investments in alternative assets. The EU AIF market has been on a continuous growth path as measured by net assets of AIFs and Assets under Management with a notable cross-border activity of AIFMs. Since the adoption of the AIFMD in 2011, total net assets of AIFs more than doubled in size from €2.3 trillion to €5.9 trillion.
The Report is analytically highlighting the impact on AIFs/AIFMs on investors; on monitoring and assessment of systemic risk; of rules on investment in private companies and in/or for the benefit of developing countries.
Following the submission of this report to the EU co-legislators, the AIFMD requires the Commission, if deemed appropriate, to put forward proposals, including amendments to the AIFMD. The Commission is still assessing the need for further proposals in this domain. The EU regulation on sustainability-related disclosures in the financial services sector will ensure coherence across different EU regulatory frameworks.
The Commission’s report can be found here.