Cordium, one of the industry’s leading regulatory and compliance firms, has devised a new offering for the European market to help managers overcome the marketing challenges of AIFMD.
Entitled the Cordium Total AIFM Solution (CTAS), the objective is to establish a fully functioning AIFM in Malta on behalf of the managers to support their plans to launch AIFMD-compliant funds.
Managers currently have two choices under the directive: to either operate their own AIFM and take on the management company responsibility, or to use a hosted AIFM solution. Where CTAS differs is that the manager retains full ownership of the Malta AIFM, whilst Cordium takes care of all the operational and compliance demands.
“This is relatively new but it’s generating a lot of interest. Our MiFID hosting solution run by Mirabella Financial Services has been working well for 10 years; while AIFMD required a necessary evolution of that business line which is why we created CTAS. It’s still early days but we’re optimistic,” says Bobby Johal (pictured), Managing Consultant at Cordium.
As time goes by, the option could be for non-EU managers to use Cordium’s Malta AIFM – separate from CTAS – in a similar fashion to how the UK FCA-regulated Mirabella platform works.
“The idea of the Malta platform as a hosted solution would be to support people looking to launch funds in Europe, including non-EU managers who currently are unable to avail of the fund passport, but which could become available in the next year or two; though this remains a politically charged issue,” says Johal.
Apart from regulatory benefits there are also potential tax-related benefits which come from operating an AIFM in Malta.
For now, CTAS is a way for existing managers to maintain their fund distribution activities in a safe and, importantly, compliant fashion, and be their own AIFM.
“With our knowhow in operations, compliance and risk management, it removes the stress. And that is the fundamental idea of a hosted AIFM solution.”
“The premise of CTAS is that the client owns the AIFM and we operate it. CTAS is not a fund platform solution on which managers can launch sub-funds. We don’t get involved in the distribution side of things at all; that’s the front-office responsibility of the manager,” says Johal.
Moving forward, the Mirabella team could onboard new managers to the Malta platform, where it would act as the investment manager in a similar incubator-type arrangement to that which exists with its UK AIFM.
“CTAS allows managers to keep doing what they need to be doing i.e. portfolio management and asset raising, while we take care of the heavy lifting to ensure they remain in compliance with AIFMD. We have risk management experts who have been working with AIFMD rules for the last few years. Our risk teams in the UK and Malta are working ever more closely with Cordium’s compliance experts. What CTAS does is bundle them together to provide a complete AIFM solution,” says Johal.
“The directive is a complex piece of legislation, there are certain onerous obligations brought to bear but it shouldn’t necessarily be a barrier to entering Europe and doing business. Commercially, AIFMD is not something to fear. That was the message I was putting across to US managers last year.”
