AIFMD | Updated ESMA Q&A

July 2015

On July 21st 2015, the European Securities and Markets Authority (“ESMA”) published an updated version of its questions and answers (“Updated Q&A”) on the application of the Alternative Investment Fund Managers Directive (“AIFMD”).

"The Updated Q&A contains clarifications on the reporting and on the calculation of the total value of assets under management (“AUM”)."

When reporting information to the national competent authorities of an EU Member State under Article 42 of the AIFMD, a non-EU AIFM marketing AIFs in EU Member States under the national private placement regime will only have to report the information regarding the AIFs that are marketed in this Member State. However, if that Member State applies ESMA’s opinion on collection of information for the effective monitoring of systemic risk the non-EU AIFM should also report information on non-EU master AIFs which are not marketed in the EU but that have either EU feeder AIFs or non-EU feeder AIFs marketed in the Union.

It has also been clarified how the AIFMs should convert the total value of assets under management into Euro. It is recommended that the AIFM presents the rounded values of the AIFs in their base currency divided by the corresponding value of one Euro into the base currency of the AIF. Both the rounded values in the base currency and in Euro must be reported for the purpose of questions 33, 34 and 48 of the consolidated reporting template for AIF-specific information. The exchange rate used for the conversion should be reported in questions 37 and 50.

ESMA also confirms that AIFMs should include AIFs created during the reported period in the total value of assets under management of the AIFM for that reporting period, even if there is no obligation to report specific information on such AIFs. As a consequence, the total value of AUM of the AIFM at the reporting date will not match the sum of the values of AUM of the AIFs reported for the same period.

Finally, with regard to the calculation of the total value of assets under management, ESMA has clarified that AIFMs should include short non-derivative positions when calculating the total value of AUM.

July 2014

The “Questions and Answers” document (the “FAQ Document”) of the European Securities and Markets Authority (“ESMA”) in respect of Directive 2011/61/EU on alternative investment fund managers (“AIFMD”) was updated on July 18th 2014.

The following topics have been newly included/updated:

  • Reporting to national competent authorities under articles 3, 24 and 42 of the AIFMD: an additional 14 questions have been added to this section of the FAQ Document, providing information on the practical content of the reporting documents which must be submitted by alternative investment fund managers (AIFMs) to their regulatory authority.
  • The FAQ Document now provides a new section on the depositary regime. Questions regarding the scope, the extent of permitted delegation and the custodial function in general are being answered.
  • In addition the FAQ Document now provides clarifications on the method of calculation of leverage for the purpose of the AIFMD and related rules and regulations.

June 2014

The ESMA published on February 2nd 2014 a FAQ Document on the practical application of the Directive 2011/61/EU on AIFMD.

The aim of the FAQ Document is to promote common supervisory approaches and practices in the application of the AIFMD and its implementing measures by providing answers to questions posed by the general public and competent authorities.

On March 25th and June 27th 2014 ESMA updated the FAQ Document. The main amendments in March relate to the reporting requirements under article 24 of the AIFMD. ESMA has provided clarifications relating to among others:

  • the consideration of repurchase transactions as financing operations.
  • the use of the residual maturity as of the reporting date when reporting information on ‘instruments traded and individual exposures’.
  • the date to submit the last report of an alternative investment fund (“AIF”) that has been liquidated or put into liquidation; such report should be submitted no later than one month after the end of the quarter in which the AIF has been liquidated or put into liquidation.
  • investors liquidity shall be calculated by dividing the AIF’s net asset value among the period buckets depending on the shortest period within which investors are entitled, under the fund documents, to withdraw invested funds or receive redemption payments.
  • the meaning of inception date; it shall be the date of authorisation of an AIF or of its establishment if authorisation is not necessary or if the AIF is only subject to registration obligations.
  • the language of the reporting; ESMA recommends that it be English.
  • the extent of the identification of the 5 biggest counterparties to whom the AIF has exposure; if they do not have BIC or LEI codes, in such case only the full name of the counterparty needs to be reported.
  • the necessity to reply to questions 296 to 301 of the consolidated reporting template; this is only required by AIFMs managing AIFs employing leverage on a substantive basis.

The amendments made in June include the following:

  • a new question 5 has been added to the section on remuneration clarifying when portfolio managers can be excluded from the scope of identified staff.
  • 3 new questions are added to the section dealing with reporting clarifying what countries are covered by the term “EEA” and the “Union” and what the terms “mandatory”, “optional” and “conditional” mean in the technical guidance.
  • Certain clarifications have been made around notifications of AIFMs under article 33 of the AIFMD.
  • A new Section V on MiFID services has been added.  The first question highlights the amendment to the AIFMD included in Directive 2014/65/EU (MiFID 2) on AIFMs authorised to provide MiFID investment services under article 6(4) of the AIFMD.  Pursuant to the amendment such AIFMs have the right to provide those services on a cross border basis.  Member States must allow such passporting of services from July 2015 but are recommended to do so even before.