Hedge funds avoiding the new Alternative Investment Fund Management Directive (AIFMD) framework due to concerns over increased compliance costs are delaying the inevitable, says Helvetic Fund Administration.
According to Nicola Smith, chief executive of the Gibraltar-based hedge fund administrator, hedge funds should work with service providers in order to meet the regulatory requirements of the framework.
The European Securities and Markets Authority (ESMA) have now published the final guidelines on the reporting requirements for the AIFMD, which it hopes will clarify what information must be provided under the regime. Despite this, reports have emerged that only a small number of fund managers in the UK have signed up to the framework since its launch in July 2013.
Smith states that the AIFMD has now reached the stage where action needs to be taken by managers: “AIFMD has always been subject to concerns as to how managers can ensure the necessary requirements of the framework are met. Even a month before its implementation in July 2013, uncertainty still remained at a domestic and international level as to how some of the AIFMD provisions would be interpreted – today nothing seems to have changed.
“It appears that a lot of managers are choosing to ignore the framework or waiting for the end of the transitional period before taking any action. This is not best practice or advisable, and managers should be taking active steps to comply during the transitional stage before regulators begin penalising those who are not in compliance by 22 July 2014.”
Smith continues: “All non-UCIT funds domiciled in the European Union (EU) will have to register with a local regulator and all non-UCIT funds managed by an EU based manager, wherever the fund is domiciled, will also be subject to registration and so our advice would be for managers to contact their service providers or us for that matter and find an affordable solution that is appropriate for their particular situation.
“In doing so, managers will receive a clearer idea of what needs to be completed internally, and what support they can expect from their service providers. We, at Helvetic, have prepared for the additional workload required in light of the new obligations and are able to supply the services required by the manager to meet their needs and in turn, fulfil their obligations under the AIFMD.”
