CP12/32: Implementation of the Alternative ... - BVCA admin

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
5
Prudential requirements for
fund managers
5.1 This chapter covers the prudential regime for all types of AIFM, including capital
requirements, professional negligence risks, the liquid assets requirement and reporting
matters. It also covers certain changes to our prudential rules affecting UCITS
management companies.
Capital, PII and reporting requirements for AIFMs and UCITS
management companies
5.2 A firm currently authorised by the FSA to manage AIFs and/or UCITS must comply with
the capital requirements of one of the following:
• UPRU if it only operates UCITS (and other CIS) as a UCITS firm;
Annex X
• GENPRU and BIPRU if it also provides investment services under MiFID as a BIPRU
investment firm; or
• IPRU (INV) Chapter 5 if it only operates CIS outside the scope of the UCITS Directive
(and IPRU (INV) Chapter 9 also if it is an exempt CAD firm).
5.3 The capital requirements of AIFMD and the UCITS Directive are broadly the same, with
both being based on funds under management and expenditure and the same types of
capital instrument allowed. As we explained in Chapter 4, a firm that is authorised to
manage an AIF may also manage UCITS (if it has permission to do so). So we intend to
transpose the capital and professional indemnity insurance (PII) requirements of AIFMD
alongside those of the UCITS Directive and use common terms to apply to both types of
manager, where possible. This means that both UCITS management companies and AIFMs
will need to consider the prudential proposals in this paper.
32 Financial Services Authority November 2012