Since the end of the transition period applicable to Alternative Investment Fund Managers (AIFMs) that were undertaking activities before the coming into force of the AIFM Directive on 22 July 2013, a clearer picture is emerging on the preparedness of operators to conduct activities under AIFMD – a Directive which has attracted mixed reactions from various sectors, with some advocating the added advantages of increased investor protection and the passporting opportunities whilst others are highlighting the increased compliance costs, uncertainty and complexities that it has brought about.
Whilst AIFMD has posed various challenges to industry operators
and regulators alike, Malta was at the forefront of implementation,
ensuring a timely transposition. This transposition entailed
amendments to the Investment Services Act, 1994 with the primary
law being supplemented by four legal notices and changes to the
MFSA's Rulebooks.
With respect to the transitional period, the MFSA received around
100 applications from existing local fund managers and internally
managed schemes, which were in operation before 22 July 2013. Such
licence holders were required to undertake a gap analysis and
identify those areas that required changes to ensure compliance
with AIFMD. Whilst many applicants already had certain structures
and procedures in place in line with AIFMD, one of the areas they
needed to tackle was the separation of the portfolio and risk
management function and the addition of staff to ensure a more
robust risk and compliance infrastructure.
The practical implementation of the Directive has proven to be a
challenging task particularly in view of the uncertainty in the
interpretation of certain requirements. One such area concerned the
delegation requirements of AIFMs. The lack of clarity on the
requirements on delegation and the application of the quantitative
and qualitative criteria set out in the Commission Delegated
Regulation, created certain uncertainty for some applicants. The
MFSA sought to address this through the exchange of views and
discussions with the industry. Where certain elements of the
portfolio management function were delegated increasing focus was
made on the need to have a fully operational and independent risk
management function undertaken by competent people in Malta.
As part of the MFSA's pragmatic approach to the implementation
of the AIFMD it took the initiative of introducing an Alternative
Investment Fund regime by way of a new Rulebook. This new regime
provides Maltese/EU AIFMs with a regulatory framework that allows
them to establish AIFMD-compliant funds for marketing to
professional investors in Malta or across the EU.
With reference to de minimis AIFMs that qualify for the exemption
available under Article 3 of the AIFMD, Malta introduced a specific
regulatory framework as it opted to regulate such entities. De
minimis AIFMs are required to be licensed rather than merely
registered.
The transition and application of the AIFMD has been facilitated
by the MFSA through the provision of guidance to the industry not
only through ongoing discussions with industry representatives but
also the issue of circulars, brochures, guidance notes and feedback
statements including frequently asked questions.
Whilst challenges and scope for greater clarity on aspects of the
Directive remain, much progress has been made resulting in
increasing interest and confidence of fund managers and
internally-managed schemes to operate under the AIFMD.
Source: Hedgeweek.com
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