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There are a number of important considerations for a fund manager, especially a start-up, when it comes to selecting an onshore depositary to an onshore AIF. But before these are explored, it is perhaps worthwhile explaining exactly what the role of the depositary is under AIFMD, given that alternative fund managers have never had to use one before.
Safekeeping of the AIF’s assets
There are two parts to this. Firstly, providing custody of financial assets that are held directly by the depositary (i.e. stocks and bonds, options and futures). Secondly, performing record keeping and ownership verification of an AIF's assets,
- 07/07/2016
- 07/07/2016
There are a multitude of costs that a start-up alternative fund manager faces today, especially with respect to those looking to establish a hedge fund under AIFMD. From regulatory costs and waiting to receive FCA authorisation, to office and IT and staffing costs, the amount of burn capital that managers initially account for can rapidly disappear down the drain.
Which is why Linear Investments is proving to be a whole lot more than merely a boutique prime broker. In short, Linear has spent a number of years building out its trading and risk management systems to provide start-ups with a
- 07/07/2016
For those wishing to set up a standalone Alternative Investment Fund, getting the right service providers in place is crucial to the manager's long-term success and reputation. The following sections detail what to look for when it comes to appointing four key service providers:
• The Fund Administrator
• The third party AIFM
• The depositary
• The Prime Broker (for hedge funds).
Onshore depositary
"An AIFMD Depositary Bank is tasked with: oversight of assets, activity, and the manager; safekeeping of assets (where required); cash flow monitoring; strict liability for restoration of lost financial assets and reporting breaches. In short,
- 07/07/2016
- 07/07/2016
On 30 June 2016, the European Securities and Markets Authority ('ESMA') is expected to announce further details on the timing and the composition of the third country passport for the first wave of countries that include Guernsey, Jersey and Switzerland. This follows ESMA's announcement last summer that Guernsey had demonstrated the ability to satisfy the criteria required under AIFMD.
For Guernsey, being in the first wave is important for two reasons. Firstly, because it demonstrates that it has a strong regulatory framework in place and meets the OECD's tax transparency guidelines – both of which are significant if you are
- 07/07/2016
For start-up managers wishing to run an onshore European AIF, the compliance and regulatory complexities might, at first glance, appear overwhelming. There are significant reporting obligations under Annex IV and regulatory capital considerations, whilst risk management is far broader in scope, extending into every facet of a fund manager's operations.
Luckily, however, there are solutions in the market that remove the burden of acting as the AIFM to an AIF, which provide start-ups the option of using a so-called hosted third party provider. One such firm is London-based Lawson Conner, a market leader in investment management solutions for the alternative
- 07/07/2016
Such is the complexity of the regulatory landscape in Europe that it is enough for any new start-up manager to resemble Edvard Munch's `The Scream'. Alongside the Markets in Financial Instruments Directive (MiFID), is the Alternative Investment Fund Managers Directive (AIFMD) and just to add to the complexity, MiFID II is scheduled to go live in 2018.
At first glance, one could be forgiven for thinking it's all too complicated.
But there are numerous forks in the road available to start-ups, and indeed solutions that can make adapting to life as a regulated entity somewhat more palatable.
The first thing
- 07/07/2016
- 07/07/2016
By Dr Isabelle Agius, Senior Manager, MFSA Regulatory Development Unit – The transposition in Malta of the Alternative Investment Fund Managers Directive1 ('AIFMD') strengthened the Maltese regulatory framework applicable to Alternative Investment Fund Managers ('AIFMs') and further reinforced the integrity of the financial system. Even though the AIFMD focussed on establishing a European framework aimed at regulating and supervising AIFMs, the Malta Financial Services Authority ('MFSA') went beyond the AIFMD and made provision for a structured framework for the regulation and supervision of Alternative Investment Funds ('AIFs').
Since July 2013, the authorisation and regulation of AIFs runs parallel with the
- 07/07/2016
Whilst the Netherlands might not be foremost when people think about choosing their preferred European jurisdiction, there are many advantages it has to offer. The Dutch regulator, the Authority for the Financial Markets ('Autoriteit Financiële Markten', or 'AFM'), is proactive, swift at processing licenses for full-scope AIFMs, and easy to approach if the manager has anything that needs clarifying.
As well as having first-rate transport, operational and technical infrastructure supported by a deep pool of professional advisers, the Netherlands' reputation is helped by having:
• A political and economic climate, which has been stable for decades;
• An exceptional number
- 07/07/2016
Since the Irish Collective Asset Management Vehicle (ICAV) came into effect on 18 March 2015, more than 157 vehicles had been authorised by the Central Bank of Ireland (through March 2016), according to the latest statistics released by Irish Funds, the representative body for Ireland's cross-border investment funds industry. In total, these funds have more than EUR8.4bn in AUM and have attracted net positive inflows every single month.
This is a testament to Ireland's reputation as Europe's leading onshore alternative funds jurisdiction and is helping to further augment the number of Irish-domiciled funds.
"Ireland has a longstanding tradition as a
- 07/07/2016
- 07/07/2016
Over the years, Ireland has built out its financial services industry to become Europe's de facto onshore alternative funds domicile.
Up until March 2015, the most popular legal entity was the Irish Plc, also known as a Part XIII Company. This has since been superceded by the hugely popular Irish Collective Asset Management Vehicle (ICAV). Since March 2015, more than 157 new funds have been registered with the CBI using the ICAV fund vehicle, equating to more than EUR8.4bn in AUM. The majority of ICAVs, moreover, have launched as AIFs to market into Europe.
The ICAV was designed to improve
- 07/07/2016
- 07/07/2016
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