AIFMD causes bottleneck
20 January 2014 London
Image: Shutterstock
There are six months to go until implementation of the Alternative Investment Fund Managers Directive (AIFMD), but fewer than 20 percent of alternative investment fund managers (AIFMSs) have submitted an application to their local regulator for AIFMD authorisation.
The research was compiled by BNY Mellon, which stated that given that securing authorisation typically takes a number of months, bottlenecks and delays are now likely to develop, putting even greater pressure on AIFMs, depositories and services providers.
Only 19 percent of respondents submitted requests for authorisation during 2013, leaving 81 percent of AIFMs surveyed still to apply to their regulator. The survey also found that 41 percent of respondents said they plan to submit their application in Q1 2014 while a further 20 percent said they would do so during the final three months period prior to the 22 July deadline—irrespective of the time required for preparing and processing applications.
Five percent of AIFs surveyed are expected to be closed, merged or sold, potentially resulting in less choice for investors.
The mean cost of AIFMD compliance is expected to be $300,000, consistent with the $305,000 figure posited by respondents to BNY Mellon’s previous survey six months ago. The majority of respondents believe the project/one-off costs of fulfilling AIFMD risk and compliance requirements will be at least $100,000—and potentially over $250,000— per institution.
Hani Kablawi, EMEA head of asset servicing at BNY Mellon, said: “There is a danger of a significant bottleneck developing in the application process, as many managers surveyed are yet to fully address their AIFMD requirements in time for the July deadline.”
“Allowing for the time required by regulators to review applications, and for depository and administrative service providers to make the relevant arrangements, there is a risk that funds will miss the application deadline. The slow progress we see around applications highlights both the uncertainties and practical challenges the industry is facing getting to grips with AIFMD.”
The research was compiled by BNY Mellon, which stated that given that securing authorisation typically takes a number of months, bottlenecks and delays are now likely to develop, putting even greater pressure on AIFMs, depositories and services providers.
Only 19 percent of respondents submitted requests for authorisation during 2013, leaving 81 percent of AIFMs surveyed still to apply to their regulator. The survey also found that 41 percent of respondents said they plan to submit their application in Q1 2014 while a further 20 percent said they would do so during the final three months period prior to the 22 July deadline—irrespective of the time required for preparing and processing applications.
Five percent of AIFs surveyed are expected to be closed, merged or sold, potentially resulting in less choice for investors.
The mean cost of AIFMD compliance is expected to be $300,000, consistent with the $305,000 figure posited by respondents to BNY Mellon’s previous survey six months ago. The majority of respondents believe the project/one-off costs of fulfilling AIFMD risk and compliance requirements will be at least $100,000—and potentially over $250,000— per institution.
Hani Kablawi, EMEA head of asset servicing at BNY Mellon, said: “There is a danger of a significant bottleneck developing in the application process, as many managers surveyed are yet to fully address their AIFMD requirements in time for the July deadline.”
“Allowing for the time required by regulators to review applications, and for depository and administrative service providers to make the relevant arrangements, there is a risk that funds will miss the application deadline. The slow progress we see around applications highlights both the uncertainties and practical challenges the industry is facing getting to grips with AIFMD.”
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