Alternative Investment Fund Managers Directive (AIFMD)
UnaVista can assist you in reporting to the relevant competent authorities.
What is AIFMD?
Alternative Investment Fund Managers Directive (AIFMD) is an EU directive that looks to place hedge funds, private equity and any other alternative investment firms into a regulated framework, in order to monitor and regulate their activity.
When do you need to comply with AIFMD by?
On 11 November 2010 European Parliament finalised the directive. EU countries must write the recommendations into their domestic legislation by 22 July 2013, at which point they will then be effective.
AIFMs will then need to seek authorisation from their local competent authorities by 22 July 2014.
Which firms will be affected by AIFMD?
The Directive covers all non-UCITS funds, e.g. hedge funds, private equity and venture capital funds, real estate funds and investment trusts.
A number of funds will be exempt from the directive:
Alternative Investment Funds (AIFs) where the only investors are the members of the managing Alternative Investment Fund Manager (AIFM), e.g. employee share scheme, pension funds, securitisation vehicles and commercial holding companies.
AIFs with assets under management of less than €100m
AIFs with assets under management of less than €500m, where the managing AIFM does not leverage or prohibit redemptions for at least 5 years
What are the key points of AIFMD?
AIFMs must apply for authorisation with their home competent authority by 22 July 2014, providing the following information:
Employee and Shareholder details
Remuneration policies and practices
Details of any outsourced activities and third party relationships
Programme of activity
Details of all of the AIFs they intend to manage
The AIFM must also have an initial capital of at least €300,000.
Once the AIFM is authorised they must publish an annual, quarterly or monthly reports (depending on their size) for each AIF, for each market.. This must include the following:
Investment strategy and objectives
All fees and charges
The depositary and auditor details
Prime broker details
Legal details of the contract
AIFMs must also disclose when they acquire (up to 50% and 75%) or dispose of (down to 10%, 20% and 30%) a stake in an unlisted EU company.
AIFMs must follow certain operational procedures in order to remain authorised by their competent authority.
AIFMs can not invest client’s portfolios in shares of their own managed AIFs
Remuneration must not encourage excessive risk taking
AIFMs must adopt procedures that allow them to monitor liquidity risk and do regular stress testing
AIFMs must perform appropriate valuation procedures at least once a year, this must be done independently from the portfolio management system
Each AIF must have a single depositary, that depositary must be in the same member state as the AIF.
If you are affected by the this regulation you may also be affected by these
How can UnaVista help you with this regulation?
UnaVista can assist you with a number of regulations thereby eliminating the need to build separate solutions for each business problem. Future regulations can be addressed via the platform as required, thereby enabling seamless evolution of your compliance solution. The specific way UnaVista can help you with AIFMD include:
Data Consolidation – UnaVista can maintain a centralised repository of all fund information required for your AIFMD reporting obligations. Data can be imported from multiple disparate systems and in many different file formats. Documents (e.g. PDFs, MS Word) may also be securely stored within the system and permissioned according to users.
Liquidity Risk Monitoring – UnaVista can assist with the calculation and monitoring of your liquidity risk, aligned to internal business processes and in accordance with your specific exception handling requirements. Tailored workflow facilitates risk mitigation actions with Management Information offering a graphical, real-time summary of your risk position.
AuM Calculation – UnaVista can help firms calculate and monitor their Assets under Management (NAV or GAV), taking into consideration liabilities and assisting with complex calculations (e.g. derivative valuation). A bespoke exception management process, including tailored workflow and full auditing, will highlight breaches of AIFMD-imposed thresholds and facilitate resolution.
Major Holdings Disclosure – UnaVista can calculate and maintain a daily record of your positions in non-listed EU companies, monitoring the percentage share of associated voting rights. Where a disclosure threshold is breached, the system will notify you of your reporting obligations and facilitate transmission of reports to the appropriate Competent Authority.