https://www.fintechfutures.com/wp-content/themes/fintech_child/assets/images/logo/fintech-logo.png
  • Home
  • COVID-19
  • News
  • Intelligence
    • Back
    • Analysis
    • Interviews
    • Features
    • White Papers
    • Case Studies
    • Surveys, Reports & Infographics
    • Webinars
    • Podcasts
    • Videos
    • Library
    • Techwire
    • Browse
  • Publications
    • Back
    • Banking Technology Magazine
    • Supplements
    • Daily News at Sibos
    • Subscribe to Magazine
  • Content Hub
    • Back
    • Diversity & Inclusion
    • COVID-19: Industry impact & response
    • Challenger Banks Guide
    • Food For Thought
    • I’m Just Saying
    • Through a Gen Z Lens
    • Vlog: It’s a matter of comms
    • Fintech Agony Uncle
    • Ask The Expert
  • Videos
  • WTF? Podcast
  • Awards
    • Back
    • Banking Technology Awards
    • PayTech Awards
  • Digital Events
  • Advertise
  • Jobs
  • More
    • Back
    • About us
    • Contact us
    • Advertising / Media Kit
    • Banking Technology Magazine Calendar
    • Reports Calendar
    • FinTech Futures Newsletter
    • Events
  • FinTech
  • BankingTech
  • PayTech
  • RegTech
  • WealthTech
  • LendTech
  • InsurTech
  • US Edition
    • Intl. Edition
Banking Technology
  • NEWSLETTER
  • Home
  • COVID-19
  • News
  • Intelligence
    • Back
    • Analysis
    • Interviews
    • Features
    • White Papers
    • Case Studies
    • Surveys, Reports & Infographics
    • Webinars
    • Podcasts
    • Videos
    • Library
    • Techwire
    • Browse
  • Publications
    • Back
    • Banking Technology Magazine
    • Supplements
    • Daily News at Sibos
    • Subscribe to Magazine
  • Content Hub
    • Back
    • Diversity & Inclusion
    • COVID-19: Industry impact & response
    • Challenger Banks Guide
    • Food For Thought
    • I’m Just Saying
    • Through a Gen Z Lens
    • Vlog: It’s a matter of comms
    • Fintech Agony Uncle
    • Ask The Expert
  • Videos
  • WTF? Podcast
  • Awards
    • Back
    • Banking Technology Awards
    • PayTech Awards
  • Digital Events
  • Advertise
  • Jobs
  • More
    • Back
    • About us
    • Contact us
    • Advertising / Media Kit
    • Banking Technology Magazine Calendar
    • Reports Calendar
    • FinTech Futures Newsletter
    • Events
  • US Edition
    • Intl. Edition
  • newsletter
  • FinTech
  • BankingTech
  • PayTech
  • RegTech
  • WealthTech
  • LendTech
  • InsurTech

bankingtech.com

bankingtech.com


A pro-fund change? Good news for AIFs

  • Written by FinTech Futures
  • 24th June 2013

savings-potThe Alternative Investment Fund Managers Directive threatens to have a significant operational impact on the industry. Fund managers will soon be subject to a host of new requirements including increased KYC and due diligence, better risk and liquidity monitoring, and new reporting and disclosure requirements. However, in the UK the transition looks to be particularly difficult.

As one of the only Member States with a pre-existing framework of fund manager regulation, the UK encounters a unique challenge when implementing the Directive. Therefore, firms will be relieved to know that, though it originally looked like the Treasury might gold-plate the Directive in certain areas, responses to a recent consultation seem to have persuaded it otherwise. As a result, the transposition looks to be much kinder on several key stakeholders, including managers under the asset threshold and entities carrying out depositary functions.

The industry is already responding to the changes. Several larger institutions have begun to offer AIFMD compliance as part of a single, outsourced service. For instance, BNP Paribas has already begun bundling accounting, risk management and reporting services into its depositary offering. These kinds of solutions offer a cost-effective alternative to the kinds of technology and operational upgrades that would otherwise be necessary to remain compliant. However, there is no cure-all and certain requirements will still prove problematic for firms without further clarification.

One of the main uncertainties remaining is how the AIFMD will interplay with other, more established regulations such as UCITS and MiFID, both of which have their own authorisation regimes. For MiFID, Member States have the power to authorise some managers to conduct low risk MiFID activities. The good news is that the FCA has stated it will make use of this power. The bad news is that firms will still have to seek MiFID authorisation to perform the full range of activities.

The picture for firms seeking UCITS authorisation is similarly complicated. The UK government has acknowledged that there is a clear overlap in definitional scope between AIFs and UCITS funds. The reason for allowing this to continue is that firms should not have to apply for multiple authorisations. However, the disadvantage is that the scope of that authorisation is blurred and managers may have to seek clarification on whether they are authorised to do the things they do.

Transposition of the Directive into national law must occur by 22nd July 2013. With this in mind, the Treasury released two proposals for consultation, one in January and a second in March. The first of these raised a number of concerns in the industry, particularly because of the way it threatened to gold-plate an already stringent Directive by including all fund managers, regardless of size.

Known Unknowns 

  • What will the fund industry look like after implementation?
  • Who will be the key technology and service providers
  • Will firms have to seek dual authorisation under MiFID and/or UCITS?

Themes

  • Both firms and regulators have spoken out against the stringency of the AIFMD’s requirements
  • The regulation is hardest on depositaries, but fund managers are also having to make significant changes
  • Many firms are likely to restructure and outsource to lessen the regulatory burden

However, managers of smaller funds can breathe a sigh of relief as the Treasury, recognising ‘concerns around the increasing regulatory burden on small firms’, has relented and chosen to implement a two-tiered system. As a result, anyone managing less than €100 million in AIFs will continue to be subject to only national regulation (unless they choose to opt-in on the AIFMD). Accordingly, it is likely some managers may seek to avoid the increased requirements by splitting their operations into smaller units to come in under the threshold.

But some of the most onerous requirements under the Directive do not apply to funds and their managers at all, but rather to depositaries, whose services all AIFs must now make use of. Those firms affected will need to implement new systems to carry out increased due diligence, monitor client cash flows and give them a single-customer view of client assets. The costs of making the technology upgrades necessary to meet these requirements may see many smaller providers withdraw from the market.

In response to this, the Treasury has again sided with the industry, promising to exercise its power to authorise other entities, which are subject to their own regulation, to act as depositaries for equities and several other instruments. As well as helping out smaller depositaries, this will also be a relief to some groups such as private equity fund managers.

Overall then, there is a lot for UK firms to applaud in the approach their regulators have taken to the AIFMD. It may be the case that, with the UK making the first move on these issues, other Member States end up following suit. Therefore, even if some questions still hang over the final implementation process, the case has clearly been made for regulatory collaboration rather than coercion.

Tags: Investment, Asset & Fund Management, Regulation, Risk Management, Uncategorised AIFMD RegTech, WealthTech European Union

Leave a comment Cancel reply

-or-

Log in with your FinTech Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related


  • Jakarta wealthtech Pluang raises $20m in pre-Series B funding
    Pluang wants to extend investment to poorer households in Indonesia.
  • FCA logo
    FCA plans whistleblower support with new campaign
    UK regulator to provide greater help to those willing to come forward.
  • Feedzai lands $200 million in Series D funding to reach unicorn status
    Risk management firm lands its largest round so far.
  • Former HSBC exec Maguire joins UK regtech Napier
    Maguire takes up a position as an advisory board member at the firm.
  • Non-fungible tokens: how do you regulate a non-conventional marketplace?
    The scope and applications are vast, and there’s real potential in online gaming.
  • Webinar: Getting to market faster by outsourcing PCI compliance
    Cost benefits, getting more value from data, protecting card data, and managing other sensitive data.
  • Fintech funding deals globally 15-21 March 2021
    Featuring SumUp, eToro, Plaid, SecurityScorecard, and Coalition.
  • People, not technology, are leading the new fund administration revolution
    Asset managers will continue to value people who understand and address their needs.

Related Content

  • Wealthtech for asset managers FundSense launches in UK
  • Time to apply 2020 tax lessons
  • Ikigai launches in UK to disrupt the asset percentage pricing model
  • NatWest faces FCA money laundering charge over £365m account

Dock - virtual roundtables

Dock is free to attend for banks and FIs

Click here to register

Sponsorship opportunities available at Dock

Click here for more info

Magazine

Banking Technology April issue out now

8th April 2021

Banking Technology March issue out now

12th March 2021
view all

Webinars

Webinar: Getting to market faster by outsourcing PCI compliance

23rd March 2021

Webinar: Balancing app innovation and cybersecurity in financial services

5th March 2021

Webinar: How to stop massive mobile banking fraud with app security and risk-based authentication

9th February 2021
view all

Reports & Surveys

FinTech Futures Industry Survey & Report 2021

4th March 2021

Report: The power of data analytics in fintech solutions

25th February 2021

Omdia Universe 2020-21: Temenos recognised as a leader for digital banking platforms

15th December 2020

Report: Digital KYB – a springboard to customer onboarding success

30th November 2020
view all

Content Hubs

Diversity & Inclusion Hub

9th April 2021

Dear Luc: your most pressing fintech problems solved by our Agony Uncle

8th April 2021

Vlog: It’s a matter of comms

30th March 2021

COVID-19: industry impact & response

26th June 2020
view all

Podcast

What the Fintech? | S.2 Episode 8 | Bank branches amid COVID-19

8th April 2021

What the Fintech? | S.2 Episode 7 | Class is in session

19th March 2021

What the Fintech? | S.2 Episode 6 | Open banking on the loose

5th March 2021
view all

Videos

It’s a matter of comms | Episode 3 | ESG

23rd March 2021

Video: Top fintech stories this week – 18 March 2021

21st March 2021

It’s a matter of comms | Episode 2 | Strategy

  • 1
2nd March 2021

Video: Top fintech stories this week – 26 February 2021

26th February 2021
view all

White Papers

Embedded insurance: a $3tn market opportunity, that could also help close the protection gap

4th January 2021

White paper: The business value of ServiceNow for retail banks

12th December 2020

E-book: Migration to cloud – your guide to delivering an intuitive customer experience

8th December 2020

White paper: Re-wiring financial services operations for a bold future

7th December 2020
view all

Techwire

Deep Knowledge Analytics Founder to Release New Book in Q3 2021: ‘Longevity Politics – Longevity as the New Political Priority of the 21st Century’

9th April 2021

Transact Confirms Current Encryption Features Comply With New Nacha Rule on Supplementing Data Security Requirements

8th April 2021

NYMBUS Partners With Segmint to Innovate Payments Data

8th April 2021

Kyriba Successfully Completes ISO 27001 Surveillance Review Audits

8th April 2021

Mogo’s Payments Platform Announces Partnership with LendingClub Bank

8th April 2021

TrueLayer Raises $70m to Build the World’s Most Valuable Open Banking Network

8th April 2021

SteelEye Raises Additional Capital as It Eyes Expansion Into North America

8th April 2021

Socure to Provide DraftKings With Additional Compliance Tools

7th April 2021
view all

Twitter

FinTech_Futures

Raising the curtain on embedded finance: the next wave of fintech is here "Embedded finance brings an entirely new… twitter.com/i/web/status/1…

10th April 2021
FinTech_Futures

Interview with FinTech Futures' @TanyaBankTech about #DockDigital2021, the unique roundtable experience. fintechfutures.com/2021/04/real-c…

9th April 2021
FinTech_Futures

How to detect and investigate public sector fraud "Detecting these crimes is one thing; investigating them and sto… twitter.com/i/web/status/1…

9th April 2021
FinTech_Futures

ICYMI funding round-up: @FinanZero, @Halasaudia, @spoko_app, @fs_cornerstone & @Sheeshafinance fintechfutures.com/2021/04/icymi-…

9th April 2021
FinTech_Futures

RT @getVGS: Join us for a @FinTech_Futures webinar on April 22nd with Brian Whorley from @PaytientApp and our own @Peter Berg – where they’…

9th April 2021
FinTech_Futures

.@acorns bags second acquisition of 2021 with AI start-up Pillar fintechfutures.com/2021/04/acorns…

9th April 2021
FinTech_Futures

Egyptian fintech @PaymobCompany lands country a record $18.5m Series A fintechfutures.com/2021/04/egypti…

9th April 2021
FinTech_Futures

Swiss neobank @alpian_sa lands $18m Series B ahead of 2021 launch fintechfutures.com/2021/04/swiss-…

9th April 2021

Dock: virtual roundtable experience like no other

18-19 May 2021; FREE TO ATTEND

US Challenger banks: who's who & what's their tech

Free to read

FinTech Futures Industry Survey & Report 2021

A deep-dive into the trends defining 2021 and beyond. FREE DOWNLOAD

Free webinar: Getting to market faster by outsourcing PCI compliance

22 April 2021, register today!

Fintech Futures
  • About us
  • Advertise with us
  • Contact us
  • Fintech jobs
  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X