ESMA’s proposed topics in AIFMD review

The European Securities and Markets Authority (ESMA) publishes letter to European Commission emphasizing areas to consider during the forthcoming review of the Alternative Investment Fund Managers Directive (AIFMD).

AIFMD has provided solid framework for alternative investment funds in Europe since 2011. It gave a basis for consistent supervision of alternative managers in the European Union, thus reassuring investors in Europe and the world that alternative investment funds are grounded in a reliable regulatory framework. However, ESMA has had significant interactions with National Competent Authorities (NCAs) on their practical experience in supervising firms in accordance with the rules. In doing so, it occurred that many areas of the framework could be improved during the Commission’s upcoming review. In addition, the recent COVID-19 related stresses highlighted some areas that could be further improved.

ESMA's recommendations for changes, cover 19 areas including harmonising the AIFMD and UCITS regimes; delegation and substance; liquidity management tools; leverage; the AIFMD reporting regime and data use; sub-thresholds AIFMs; increasing digitalisation in AIFMD; and the harmonisation of supervision of cross-border entities.

ESMA believes that the AIFMD review is an opportunity to consider greater harmonisation of the UCITS and AIFMD frameworks.

ESMA encourages the Commission to support the areas identified in the letter in order to improve the effectiveness and soundness of the AIFMD.

Parties offering white-label services should review the proposals as these services are specifically referenced in the letter together with substance requirements and delegation.

ESMA also recommends that there should be a specific framework for loan origination within the AIFMD.

The press release can be found here.

ESMA’s letter to the European Commission can be found here.