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

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
5.15 In addition, it must hold own funds or PII to cover risks arising from professional
negligence 35 and invest any own funds required by Article 9(7) in liquid assets.
5.16 AIFMD is not clear on whether the requirements based on either funds under management
or expenditure (in Articles 9(3) and 9(5)) apply to internally-managed AIFs. However, we
do not propose at present to apply these requirements because this is our understanding of
AIFMD’s intended policy outcome. This approach is consistent with the requirements of the
UCITS Directive on which the capital requirements of AIFMD are largely based.
5.17 In DP12/1 we said that we could consider the regulatory regimes in other Member
States, which require either the promoter or the internally-managed AIF to hold the
capital. Having reviewed the replies, we propose to apply the requirements directly to
the AIF, as respondents indicated there is unlikely to be a promoter in the UK.
November 2012
Q2: Do you agree with our proposed approach to the capital and
PII requirements for CPM firms and internally-managed AIFs?
Collective Portfolio Management Investment Firm (CPMI firm)
5.18 Article 6(4) of AIFMD allows Member States to authorise an AIFM to provide certain
MiFID services. As explained in Chapter 4, we intend to allow this derogation, as we have
done for UCITS management companies, so that in addition to managing AIFs an AIFM
may manage portfolios of investments and provide certain non-core MiFID services. We
propose to define such a firm as a ‘CPMI firm’ for the purposes of determining its
prudential requirements. This term will include what is currently defined as a UCITS
investment firm, i.e. a UCITS management company, which carries out the MiFID services
that are permitted by Article 6 of the UCITS Directive.
5.19 An AIFM that provides MiFID services is required to comply with specified provisions of
MiFID. 36 We have considered to what extent this means the firm is subject to the CAD and
have two options. We could apply the same interpretation as for UCITS investment firms
when we implemented the UCITS Directive, meaning an AIFM that provides MiFID
services is a BIPRU limited licence firm, but only subject to the pillar 1 requirements of
BIPRU for its designated investment business. Alternatively, we could apply the capital
requirements of AIFMD only, meaning we would not need to apply the rest of the CAD
and would treat an AIFM undertaking MiFID activities in the same way as one that did not
undertake such business. Whichever approach we take, the same approach should apply to
AIFMs and UCITS management companies.
35 Article 9(7) AIFMD.
36 These provisions include Article 12 of MiFID, which states a firm must have sufficient initial capital in accordance with the CAD,
having regard to the nature of its investment business.
Financial Services Authority 35