UK FSA publishes AIFMD consultation paper

14 Nov, 2012

The UK Financial Services Authority (FSA) has published its first consultation paper on AIFMD.

The consultation paper covers the Level 1 Directive only as the European Commission is yet to issue the Level 2 regulation. Experts have speculated that Level 2 guidance could be issued anywhere between next week and December 2012.

The consultation paper outlines provisions for the prudential regime for all types of AIFs, as well as rules surrounding depositaries including eligibility, capital requirements and the requirement to act independently. It also discusses the Level 1 requirements focusing on organisational matters, transparency and obligations to investors.

The FSA estimated its one-off implementation costs for AIFMD will be around £5 million. “These cover staff costs and costs of anticipated systems' developments following the high-level gap analysis on the back of the initial interpretation of the Directive,” read the consultation. However, it added additional supervisory staff “may be needed on an ongoing basis due to the increase in the number of regulated firms.”

The consultation will close on February 1, 2013. The FSA intends to publish a second consultation in February 2013 on other aspects of AIFMD implementation.

Martin Cornish, solicitor at the newly formed M.W. Cornish & Co and former partner at K&L Gates, welcomed the UK FSA’s confirmation that existing fund managers would be given until July 2014 to comply with AIFMD. While experts knew there would be a 12 month grace period, Cornish said it was reassuring the FSA clarified this.

"Level 2 is unlikely to be published before December 2012 which would give managers just six months to get up to date with the compliance requirements and that would have been a push. Having an additional year to get compliant will be of huge help,” said  Cornish. He also predicted a surge in managers launching prior to July 22, 2013. “I expect a lot of managers will launch earlier than anticipated so as to claim the 12 month grace period with the rules,” he said.