Asset managers need to be familiar with the latest regulatory developments, but with the recent European Commission and
ESMA initiatives, navigating the various changes surrounding the AIFMD can be a complex task. Here are just some of the
recent developments addressed by Imogen Garner as part of Norton Rose Fulbright LLP’s global webinar series on asset
Following its mandate from the Commission, KPMG
published its review of the AIFMD in January this year. The
key findings of the report suggest that the application of
the AIMFD is still a work in progress. While the AIFMD has
helped create an internal market for alternative investment
funds and a harmonious regulatory regime, some of its
provisions have failed to contribute – or even hindered –
the achievement of the AIFMD’s objectives.
Needless to say, the Commission has not agreed with all of
KPMG’s findings, and intends to continue its own work on
reviewing the AIFMD. The Commission currently plans to
publish its own report over the course of 2020, which will
focus on areas that were not analysed in detail by KPMG
such as leverage, reporting and diverging rules across
ESMA’s technical advice on the integration of sustainability risks
and environmental, social and gonernance (ESG) factors has
now been submitted and the Commission is expected to adopt it
by the end of this year.
This technical advice entails a suite of changes across MiFID II,
UCITS and AIFMD which may have a large impact primarily on
the daily operations and organisational set-up of asset managers.
Once implemented, new delegated regulations will, amongst other
things, require managers to take into account ESG considerations
when complying with organisational requirements and consider
sustainability risks in risk management policies and procedures.
The Omnibus Regulation, which entered into force in
August this year, is expected to bring significant changes to
marketing restrictions on investment funds. The legislative
changes implement a controversially limited definition of
“pre-marketing” under the AIFMD which essentially
restricts the distribution of draft offering documents to
The new rules on pre-marketing become applicable
in August 2021 by which point the rules must be
implemented into domestic law by Member States.
Liquidity Stress Testing
ESMA has released its finalised guidelines on liquidity stress
testing (LST) which notably require managers to build LST
models, increase the frequency of testing and document any
testing in LST policies. The changes are due to take effect from
30 September next year, which gives managers little more than a
year to prepare.
Industry feedback has been muted, with industry associations
citing tight deadlines, unavailable data and excessive cost. The
reality, however, is existing LST practices are incredibly varied
and while some managers may be able to comply with the
guidelines by making minor amendments, some managers will
have to rebuild their LST models from scratch.
More detail can be found on Norton Rose Fulbright LLP’s global asset management regulation webinar series, which
explores the key issues and requirements firms should be considering when looking to launch an overseas fund in Europe,
Asia Pacific, the US and Canada. To access the webinar series, please register on our NRF Institute webpage.
Once registered, the webinars can be found on our asset management regulation hub.