The publication of rules for implementing new hedge fund laws means alternative investment managers are now in a better position to prepare for their July 2013 deadline.
Delays in implementing the Alternative Investment Fund Managers Directive (AIFMD) had put preparations on hold for the affected funds, which include private equity vehicles.
“[The publication] will enable the global industry to make its final preparations for implementing the directive by July 2013,” says Andrew Baker, chief executive of the Alternative Investment Management Association.
The implementation rules were released by Brussels and the publication means EU member states can start transposing the directive into national law.
However, even with the publication of the implementing rules it is uncertain whether alternative funds will be ready, even with a seven-month lead time.
A survey by professional services firm KPMG says nearly half of alternative fund managers have yet to take real action to prepare for the AIFMD, and there are some challenges to overcome.
The depositary rule within the AIFMD raises the liability for depositary banks should a fund fail. Depositary banks are expected to increase fees to compensate for the extra risks they take.
They have also said less profitable clients may have to be managed out due to cost pressures linked to regulation (see for example here).
It is unclear whether the tricky conversations that would pre-empt fee rises and other manoeuvres have yet taken place given the absence of the implementing rules.
The process of appointing a depositary for private equity vehicles – an AIFMD requirement - is also likely to be a lengthy one.
These factors make the July deadline look unrealistic.
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