Hedge Fund Directive Goes into Force in Europe

Terry Flanagan

Monday marked the go-live date of the Alternative Investment Fund Management Directive (AIFMD) – a European wide directive that is touted to transform the fund management industry.
BNP Paribas declared itself ready for the transition of its asset manager and asset owner clients.

BNP Paribas Securities Services has significantly invested to ramp up its services, and today provides the largest depositary network in Europe, having already implemented AIFMD compliant processes across all jurisdictions.

“We are fully set up to support our early mover clients and congratulate those pioneering AIFMs who have already successfully navigated their way to AIFMD compliance,” said Philippe Ricard, global head of AFS products. “We also encourage those who are yet to start the journey – it’s not as daunting as one might think! AIFMD can provide asset managers with an opportunity to grow their business in Europe, and we have developed dedicated approaches to assist and help our clients do just that by benefiting from our global network. This covers a wide range of areas including fund structuring and cross-border distribution.”

The European Securities and Markets Authority (Esma) has approved co-operation arrangements between EU securities regulators and their global counterparts with responsibility for the supervision of alternative investment funds, including hedge funds, private equity and real estate funds.

ESMA has now negotiated 38 agreements on behalf of the 31 EU/EEA national competent authorities for securities markets supervision. The agreements cover third-country alternative investment fund managers (AIFMs) that market alternative investment funds (AIFs) in the EU and EU AIFMs that manage or market AIFs outside the EU. The co-operation arrangements are applicable from July 22, and will enable cross-border marketing of AIFs to professional investors between jurisdictions.

“In many respects this has the hallmarks of the recent Retail Distribution Review introduced by the FSA in June 2006, and which came into force on December 31, 2012,” said David Mitchell, valuations partner at accounting firm BDO, in a blog posting. “Despite giving some 6½ years notice many IFAs and other financial advisors were still caught off-guard. The introduction of AIFMD will be no different, only this time many fund management and private equity firms will be the ones in the frame.”

BNP Paribas Securities Services has developed a specific AIFMD transition package to help clients through the process and ensure seamless transition. It includes a comprehensive methodology to launch the AIFMD change over for each type of fund (standard, Hedge funds, Private equity or Real Estate funds), a practical tool box for the on-boarding process to execute the transition, and a detailed ready-to-use planner.

James McAleenan, head of the UK for BNP Paribas Securities Services, added: “AIFMD will also clearly broaden the role and scope of the depositary, which is a true challenge for asset managers in the UK who will have to deal with the different regulatory requirements in the various markets in order to protect their fund’s assets.”

Related articles

  1. Tradeweb Draws Buy Side in Europe

    Net sales registered net outflows of €3bn, compared to €42bn in March 2022.

  2. European financial markets would benefit from a well-functioning fixed income consolidated tape.

  3. Trading Europe From ‘Across the Pond’

    European government bond trading volumes increased 17.5% year-on-year in the first quarter.

  4. Net sales turned negative for the first time since March 2020.

  5. Trading Europe From ‘Across the Pond’

    The EU needs to implement a consolidated tape across Europe to compete as a global player.