INDOS suggests AIFMD progress has been ‘scant’
01 September 2020 London
Image: zenzen/Adobe Stock
INDOS Financial, an independent depositary and fund oversight provider, has called on the European Securities and Markets Authority (ESMA) to address a number of omissions in the EU’s Alternative Investment Fund Managers Directive (AIFMD).
This follows ESMA’s letter to the European Commission in late August outlining 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.
INDOS Financial’s CEO Bill Prew explained that after multiple reviews and industry consultations on the directive, “progress on AIFMD has been scant”.
Prew said: “AIFMD cannot be allowed to wither. Instead, it is time the uncertainties and omissions that have blighted AIFMD over the years are resolved.”
He noted that 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”.
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, Prew highlighted that there is still a lack of guidance about depositaries and no moves to create a pan-EU depositary passport, which he explained 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 added.
This follows ESMA’s letter to the European Commission in late August outlining 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.
INDOS Financial’s CEO Bill Prew explained that after multiple reviews and industry consultations on the directive, “progress on AIFMD has been scant”.
Prew said: “AIFMD cannot be allowed to wither. Instead, it is time the uncertainties and omissions that have blighted AIFMD over the years are resolved.”
He noted that 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”.
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, Prew highlighted that there is still a lack of guidance about depositaries and no moves to create a pan-EU depositary passport, which he explained 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 added.
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