European Fund and Asset Management Association (EFAMA) has said it welcomes the European Commission’s draft report for Alternative Investment Fund Managers Directive (AIFMD) and UCITS reviews, authored by Member of the European Parliament and rapporteur, Isabel Benjumea.
The association stated the draft report acts as an “important milestone” toward ensuring accessibility of capital in Europe, providing incentives to ensure growth and promote a safe and stable environment for markets and investors.
The draft report largely validates and usefully complements the Commission’s legislative proposal which already provided a strong starting point to ensure targeted improvements are made to enhance the efficacy of the current frameworks, as a means of advancing the goals of the Capital Markets Union, said EFAMA.
The association added it was pleased to note the recognition given in the draft report to the primary role of the asset manager in liquidity risk management and that delegation is “rightfully identified” as a beneficial practice for asset management companies and their investors.
Commenting on this, Tanguy van de Werve, director general of EFAMA, said: “It would be detrimental to investor protection and financial stability more broadly to attempt to replace the informed discretion of the asset manager with that of an external party.”
On the subjects of delegation and outsourcing, EFAMA said it welcomes the clarifications brought to the scope of the delegation regime and said it will closely study the proposition made by Isabel Benjumea to replace the delegation notification to the European Securities and Markets Authority with delegation-related supervisory reporting requirements.
Though it adds, the current references to asset managers, having to determine whether their portfolio and/or risk management functions are fully or only partially delegated, may warrant some caution.
EFAMA shares the rapporteur’s view that loan origination by funds can provide an important source of funding to the European economy, which will be critical to achieving the Capital Market Union goal of a green, digital, inclusive and resilient economic recovery.
It is important to ensure that the proposed rules support rather than hinder this goal, the association added.
In addition, regarding depositary passports, EFAMA said it fully supports the rapporteur’s decision to not introduce a depositary passport in the revised Alternative Investment Fund Managers Directive regime.
The requirement for the depositary to share the same domicile as the fund should be preserved, EFAMA outlined, as it represents an important safeguard for investor protection.
The draft report was authored two months after the European Commission said it would adopt a “targeted approach” to the review of the Alternative Investment Fund Management Directive, back in March.
The promise of a “targeted approach” was welcomed by EFAMA, demonstrating that the European Commission “recognise[d] the role this framework has played in encouraging the growth in the European Alternative Investment Fund market over the past decade and its resilience, even throughout recent market stresses”.