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

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
amount of own funds and we presume this can only be additional to the Article 9(2)
requirement which, for this purpose, we therefore interpret as an own funds requirement.
Collective portfolio management firm (CPM firm)
Annex X
5.9 The initial capital requirement for a CPM firm is €125,000 30 , which as set out above needs
to be met out of ‘initial capital’ when the firm is first authorised and out of ‘own funds’ on
an ongoing basis. To arrive at the ongoing capital requirement for a CPM firm, a number
of elements need to be combined. These are a basic amount (initial capital), a percentage of
portfolios under management, an expenditure-based minimum and (where applicable) a
capital requirement in respect of professional negligence.
5.10 The way in which these elements need to be combined means that a CPM firm has to
maintain own funds of at least the higher of the following:
• €125,000; plus 0.02% of the portfolios of UCITS and AIFs under management over
€250m 31 ; and
• one quarter of the firm’s relevant fixed expenditure. 32
5.11 In addition, a CPM firm that manages AIFs must hold a further amount of own funds
and/or PII to cover risks arising from professional negligence 33 (see paragraphs 5.29 to
5.31 for details).
5.12 Furthermore, own funds (other than those held to meet the basic €125,000 requirement)
must be invested in liquid assets (see paragraphs 5.32 to 5.35 for details).
5.13 In due course we will need to take into account the amendments to the CAD that will
implement Basel 3. 34 It is too early to anticipate these changes in this consultation, but we
expect to incorporate any necessary amendments in the Policy Statement.
Internally-managed AIF
5.14 AIFMD requires an internally-managed AIF to have initial capital of at least €300,000.
This applies when it is first authorised as an internally-managed AIF. Consistent with the
approach for a CPM firm, we propose that the initial capital requirement should be met
out of own funds on an ongoing basis.
30 Article 9(2) AIFMD or Article 7(1)(a) of the UCITS Directive.
31 Article 9(3) AIFMD or Article 7(1)(a) of the UCITS Directive.
32 Article 9(5) AIFMD or Article 7(1)(a) of the UCITS Directive.
33 Article 9(7) AIFMD.
34 Basel 3 is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members
of the Basel Committee on Banking Supervision in 2010-11. It will be implemented in the EU through amendments to the CAD.
34 Financial Services Authority November 2012