What Is the Alterna💞tive Iꩲnvestment Fund Managers Directive (AIFMD)?

The Alternative Investment Fund Managers Directive (AIFMD) is a European Union (EU) regulation that applies to 澳洲幸运5官方开奖结果体彩网:alternative investments, many of which were left largely unchecked prior to the 2008-09 global financial crisis. The directive sets standards for marketing around rꩲaising private capital, remuneraꦓtion policies, risk monitoring and reporting, as well as overall accountability.

The primary goal of the AIFMD is to protect investors as well as reduce some of the 澳洲幸运5官方开奖结果体彩网:systemic risk that alternative investment funds can pose to꧒ the EU and its economy. 

How the Alternative Investment Fund Managers Directive (༒AIFMD) Works

The global 澳洲幸运5官方开奖结果体彩网:financial crisis was rooted in alternative investment vehicles such as subprime mortgages. After the global financial crisis hit, the EU made a move to regulate the alternative investment industry, particularly 澳洲幸运5官方开奖结果体彩网:hedge funds, real estate funds, and private equity. Many of these vehicles remained largely u𒐪nregulated on a grand, globᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚal scale and were virtually unchecked in the EU.

The AIFMD was implemented in the EU in 2013. But rather than pass regulation on the funds themselves, the directive's aim is to regulate the fund managers.

Any manager that operates a fund in the EU is subject to AIFMD regulation, regardless of whether it is set up within or outside the union's borders. The 澳洲幸运5官方开奖结果体彩网:institutional funds that fall under the AIFMD were previously outside of EU financial regulations for disclosure and transparency, including the 澳洲幸运5官方开奖结果体彩网꧅:Markets in Financial Instruments♔ Directive (MIFID), which aimed to boost transparency ac🌃ross the union's financial markets.

Core Objectives

The AIFMD has two major objectives.

First and foremost, it seeks to protect investors by introducing stricter compliance around how and what information is disclosed. This includes conflicts of interest, 澳洲幸运5官方开奖结果体彩网:liquidity profiles, and an independent 澳洲幸运5官方开奖结果体彩网:valuation of assets. The directive points out that alternative investment funds are only intended for professional investors, although some member states can choose to make these funds available to retail investors as 🌃long as additional safeguards are app💃lied at a national level.

The second objective is to remove some of the systemic risks these funds can pose to the EU economy. In order to do this, the AIFMD mandates that 澳洲幸运5官方开奖结果体彩网:remuneration policies be structured in a way that does not encourage excessive risk-taking, that 澳洲幸运5官方开奖结果体彩网:financial leverage is reported to theꦅ European Systemic Risk Board (ERSB), and that the funds have robust risk management systems that take liquidღity into account.

Special Considerations

Compliance with AIFMD is required in order to get a passport to sell financial services across the EU market. As the EU is still one of the wealthiest regions, hedge funds and 澳洲幸运5官方开奖结果体彩网:private equity funds are investing in 澳洲幸运5官方开奖结果体彩网:compliance departments even as they complain about the burden and💖 issue dire warnings of competition suffering as a result.

Some of the requirements of the AIFMD include:

• Business conduct including identifying 澳洲幸运5官方开奖结果体彩网:conflicts of interest, fairness toward investors, full and complete 澳洲幸运5官方开奖结果体彩网:disclosure, risk management, and remuneration
• Minimum capital requirements including initial capital and total 澳洲幸运5官方开奖结果体彩网:assets under management (AUM)
• 澳洲幸运5官方开奖结果体彩网:Marketing efforts directed solely at investors within the EU
• How investments are safeguarded—through 澳洲幸运5官方开奖结果体彩网:custodians and depositaries