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

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
5.4 To implement this approach we propose to use the following terms to describe the capital
requirements that will be applicable to the resulting types of firm:
November 2012
• Collective portfolio management firm (CPM firm) – a firm that undertakes external
collective portfolio management of AIFs, UCITS or both, but does not provide any
MiFID services. This includes what is currently defined as a UCITS firm.
• Internally managed AIF – an AIF where the legal form permits internal management
and where the AIF’s governing body chooses not to appoint an external AIFM.
• Collective portfolio management investment firm (CPMI firm) – a firm that undertakes
external collective portfolio management of AIFs, UCITS or both and provides MiFID
services (as permitted by AIFMD and/or the UCITS Directive). This includes what is
currently defined as a UCITS investment firm.
5.5 This will result in the following changes to the Handbook:
• a new Chapter 7 in IPRU(INV) setting out the requirements for CPM firms and
internally managed AIFs;
• amendments to GENPRU and BIPRU to include the requirements for CPMI firms; and
• the deletion of UPRU (with the result that UCITS firms will be subject to the
requirements of IPRU (INV) Chapter 7 28 ).
5.6 Our proposed approach is based on our understanding of AIFMD and the way we
implemented the UCITS Directive (on which AIFMD’s capital provisions are largely based).
Where relevant we have taken into account the responses we received to DP12/1. 29
Initial capital and own funds
5.7 AIFMD and the UCITS Directive require firms to meet an initial capital requirement and
an own funds requirement. The terms ‘initial capital’ and ‘own funds’ are defined by
reference to the CAD. Both are measures of financial resources, but they refer to different
combinations of capital items.
5.8 The initial capital requirement applies when it is first authorised, but it is not clear how this
requirement should apply on an ongoing basis. We propose that the initial capital requirement
should be met out of own funds on an ongoing basis. This is consistent with the CAD
approach for MiFID investment firms and the way we implemented similar requirements in
the UCITS Directive. It is a purposive and proportionate calculation of capital resources, as the
own funds calculation better reflects the continuing obligations of the firm (for example it
requires the deduction of goodwill). Also, Article 9(3) of AIFMD requires an additional
28 This will be subject to an appropriate transitional period on which we will consult in due course.
29 The responses to questions 18-24 of DP12/1 are taken into account in the proposals in this Chapter.
Financial Services Authority 33