The European Securities and Markets Authority (“ESMA“) has written to the European Commission (“the Commission“) highlighting areas to consider during its review of the Alternative Investment Fund Managers Directive (“AIFMD“).
ESMA recognises that the AIFMD has provided a solid framework for alternative investment funds in Europe. However, ESMA says it and national competent authorities have gathered experience with the framework and have identified ways the legislation could be improved to enhance the supervision of alternative fund managers in Europe. ESMA says it has also learned from its role in the reporting framework where improvements could be made.
Specifically, ESMA’s letter includes recommendations for changes in 19 areas, including harmonising the AIFMD and UCITS regimes; clarifying which additional MiFID activities AIFMs may perform; delegation and substance (including more specific requirements on white-label service providers); liquidity management tools; leverage; the AIFMD reporting regime and data use; consideration of whether to include any new categories of investor (like “semi-professionals); a potential specific regime for loan-originating funds; clarifying certain definitions, and specifically clarifying what “reverse solicitation” is and the harmonisation of supervision of cross-border entities.
Annex I to the letter sets out ESMA’s recommendations to the legislative framework and reporting recommendations are made in Annex II. Many of the recommendations made also require consideration of changes to the UCITS legislative framework.
ESMA has encouraged the Commission to support the areas identified in its letter in order to improve the effectiveness of the AIFMD.