The Alternative Investment Fund Managers Directive (AIFMD) is a cornerstone of EU legislation on depositary banks. It will not come as a surprise that when the Commission launched its consultation on the planned AIFMD review on 22 October, a few questions unavoidably touched upon depositaries. What difficulties do depositaries face in exercising their functions in accordance with the AIFMD? Is it necessary to define and regulate aspects of the AIFMD tri-party collateral management services? Are rules on prime-brokers clear?
Beyond the more technical questions, the Commission raises the issue of the appropriateness of a depositary passport, its potential risks and benefits as well as barriers to overcome. It is widely understood that a smaller EU investment fund center currently lacks a compulsory depositary for its funds as mandated by the legislation. Hence the question whether there would be other options to address the lack of supply of depositary services in this jurisdiction.
Beyond the specific issue of depositaries, the vast majority of questions nevertheless deal with AIFs, their managers, investor protection, international aspects including (portfolio and risk management) delegation, supervision and reporting, private equity and sustainability.
Depositary banks and other stakeholders have until 29 January to respond to the consultation. The ABBL has started working on its contribution.
By Antoine Kremer