Tue, Feb 20, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque UCITS intelligence

Regulation: How the AMF is responding to AIFMD?

Wednesday, July 24, 2013

The implementation of AIFM this summer is certainly one of the greatest challenge of the european hedge fund industry. As we are publishing this edition, we do not have yet all the elements in hands to get a clear vision on the short term impact on the fund managers. However, we have looked at the AIFM implementation guidelines in the UK and in France, trying to adress how the two countries adress such regulatory issues.

France : feedback from the AMF, Edouard Vieillefond at the latest Opalesque Roundtable in Paris. (The complete document can be downloaded on: www.opalesque.com).

We have been helping a lot technically to redraft the Code monétaire et financier alongside the French Treasury, as we did for UCITS IV. And we have had to do it with the deadline in mind, because the ordinance implementing the directive into French law will have to be published no later than July 31st.

People often think that the AIFM directive is only targeted at hedge funds, which is far from true, particularly in France. About two thirds of our 600 French asset management companies will eventually be AIFM authorized and the majority of funds domiciled in France are not UCITS and will fall under the category of AIF, which is something people don't realize. These actors are already subject to national regulation and supervision, regardless of the AIFMD.

Also, one should keep in mind that this directive was originally one of the responses of Europe to the G20 following the crisis. From the outset, AIFMD was a directive aimed primarily at addressing systemic risks (through enhanced reporting, regulators' power to set a limit to funds' leverage). Fostering competition and opening the European market (through the passport for management and marketing activities) only came second in the minds of legislators.

Against this background, it is worth noting that a number of provisions in AIFMD are directly inspired from the French regulation framework. Actually this is one of the reasons why generally speaking French asset management companies will have it easier to adjust to it than some of their European competitors, because already comply with many standards it contains.

The rules on depository provide a good example: both in AIFMD, and tomorrow in UCITS V, they are very much inspired by French rules, as these have been widely acknowledged as protective and efficient. There are other examples, such as valuation or the prevention of conflicts of interests.

So the bottom line is that managers will have to adapt to certain new requirements (reporting, liquidity management etc.) which are a consequence of the crisis, but overall it is not for French asset managers that the gap to bridge is the widest.

Then my second point is that - similar to what we did when implementing UCITS IV back in 2011 - we have tried to take advantage of the implementation of AIFMD to try and simplify a number of things and make the environment more businessfriendly and simpler. As you probablyknow, we have tried to simplify fund denominations in the Code montaire et financier, merge together or rebrand certain exiting vehicles, and better delineate between retail and non-retail vehicles. We have also simplified the subscription thresholds for retail and professional investors across our existing AIF.

My last point is that the implementation of AIFMD (and later UCITS V) should not distract asset managers from other pieces of European legislation like EMIR and MiFID 2 which will have a huge impact on asset management as well. Questions of consistent articulation between these texts may raise some important issues, because, to be frank, they seem to have been thought “in silos” to some extent, without cross-examining their consistency with one another. For instance, EMIR concentrates counterparty risks in OTC derivative transactions at the level of central clearing houses, whereas UCITS sets rules for spreading that counterparty risk. The status of securitization vehicles across AIMFD and EMIR is another interesting issue.

So, at the end, I think there is a lot of progress to be made at international and european levels, to ensure that those regulations are consistent with each other and that they create an overall environment that is favorable to the asset management industry. We must also remind those in charge of addressing the shadow banking issues, that entities from the asset management world which are part of shadow banking are already heavily regulated in Europe, something that some regulators, notably banking regulators, don't realize enough.



 
This article was published in Opalesque UCITS intelligence.
Opalesque UCITS intelligence
Opalesque UCITS intelligence
Opalesque UCITS intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Chenavari, a $5.4bn hedge fund, told investors it thinks 'we could experience a similar pattern as the 1987 crash'[more]

    From Businessinsider.com: A $5.4 billion hedge fund told clients markets could tumble just like they did in the 1987 crash. In a February 14 letter to clients, London-based Chenavari Investment Managers warned about current market conditions. From the letter (emphasis added): "Our view is that

  2. Investing - Hedge fund Bridgewater makes $22 billion bet against European firms, Hedge funds Steadfast and Suvretta jump onto CSX in fourth quarter, Tepper's Appaloosa boosts Apple, Facebook as others bolt, Third Point buys Netflix and MGM, dumps Bank of America, Moore Capital bought Wynn Resorts, other casino stocks before Steve Wynn resigned[more]

    Hedge fund Bridgewater makes $22 billion bet against European firms From Reuters/USNews.com: Bridgewater has shown its hand in Europe with a $22 billion bet against some of the continent's biggest companies, filings reviewed by Reuters show, part of a bigger shift by the world's largest

  3. Funds Profiles - Brother-run hedge fund up 46% in 2017 says Kelly formula shows diversification is flawed, How a 6,000% profit on a single trade saved a small hedge fund from disaster[more]

    Brother-run hedge fund up 46% in 2017 says Kelly formula shows diversification is flawed From Valuewalk.com: When Jeremy and Michael Kahan consider the notion of diversification, the wince. With a return of 45.8% to end 2017, their stock-picking fund, North Peak Capital, successfully

  4. Investing - Hedge funds hook shipping stocks grappling for recovery, Small cap hedge funds offer alternative for cannabis investing, Top stock-picking hedge funds love gaming, health care and media shares, Hedge funds Steadfast and Suvretta jump onto CSX in fourth quarter[more]

    Hedge funds hook shipping stocks grappling for recovery From Hellenicshippingnews.com: Shipping stocks may still be in the doldrums in the view of many investors, but hedge funds have bet at least $675 million on signs of renewed buoyancy in the industry. Hedge funds made initial f

  5. Art & Motion launches collectible car alternative investment vehicle[more]

    Komfie Manalo, Opalesque Asia: Luxembourg-based Art & Motion has launched a new investment vehicle dedicated to vintage cars and exceptional high-quality vehicles as this collectible market has grown exponentially the turn of the centu