French, German investors lack choice under AIFMD

Euro signInvestors based in France and Germany will have less choice of alternative funds to invest in because of local rules that go over and above the Alternative Investment Fund Managers Directive (AIFMD), it is claimed.

Some key European markets are “gold-plating” the marketing requirements for legacy national private placement regimes beyond those required by the AIFMD.

While several countries including the UK, Ireland, Sweden and Luxembourg are requiring non-domestic alternative managers to comply only with the minimum rules laid down by the AIFMD when using private placement in their countries, some countries have chosen to impose additional requirements.

France has elected to impose such significant additional requirements on non-domestic alternative managers seeking to market under France’s private placement regime that they will find it extremely difficult to market funds in France, say the Alternative Investment Management Association (AIMA), a hedge fund industry association, and EY, a business consultancy, in a report called AIFMD: the road to implementation.

Germany is one of a small number of EU countries that will require non-EU alternative managers of non-EU funds to appoint an entity to carry out the so called “depositary-lite” duties of cash monitoring, safekeeping of assets and oversight and verification, a requirement under the AIFMD applied only to EU managers marketing non-EU funds.

Jiri Krol, AIMA’s deputy CEO, head of government & regulatory affairs, said: “Investors in those jurisdictions that have gold-plated the minimum requirements set out in the Directive for the national private placement regimes will have a more restricted selection of funds to choose from compared to peers in other countries. However those Member States which sought the preservation of private placement regimes have provided transitional relief and refrained from imposing additional rules.”

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