INDOS Financial calls for resolution of AIFMD omissions

Submitted 01/09/2020 - 10:42am

Independent depositary and fund oversight provider INDOS Financial has highlighted a series of omissions in the EU’s Alternative Investment Fund Managers Directive with the hope these will quickly be addressed by ESMA (The European Securities and Markets Authority).

In August 2020, ESMA published a letter to the European Commission outlining its proposals on further reform of the AIFMD. The letter is the culmination of ESMA’s multi-year review of AIFMD which also included an extensive study conducted by KPMG in 2018, the findings of which were published in January 2019. 

“Although ESMA’s letter made some AIFMD related recommendations, there were some notable omissions and a troubling focus on substance and the delegation of asset management tasks by EU managers to firms outside the EU which could have a material impact on the management of EU domiciled funds in the future,” says Bill Prew, CEO, INDOS Financial.

Conceding that Brexit may have derailed the initiative, Prew pointed specifically to the failure to extend the AIFMD marketing passport to non-EU third countries despite EU ambitions expressed in 2015.  

Additionally there is still a lack of guidance about depositaries and no moves to create a pan-EU depositary passport – which would enable depositaries to offer more flexible client solutions and which would be in line with the Single Market’s guiding principles.

“Most disappointingly, the AIFMD review has not addressed the conflicts of interest facing depositaries which are affiliated to other service providers such as fund administrators or custodians,” Prew adds. “After multiple reviews and industry consultations on the directive, progress on AIFMD has been scant.

“AIFMD cannot be allowed to wither. Instead it is time the uncertainties and omissions that have blighted AIFMD over the years are resolved.”
 

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