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

November 2012
Delegation
Delegation by authorised AIFMs
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
7.52 The Directive aims to ensure that, where AIFMs delegate their AIFM functions, they only
do so subject to certain conditions. 75 In order to ensure they are compliant with our new
rules, AIFMs will need to review their current delegation arrangements against the
criteria mentioned below, whether the delegation is done intra-group or involves
independent third parties.
7.53 Where the AIFM proposes to delegate any investment management function to a firm
outside the EEA, it must in future obtain prior approval from us if that firm is not
authorised or registered in its jurisdiction and is not subject to supervision.
7.54 We intend to transpose delegation requirements in FUND 3.10. These new rules will
require AIFMs to notify us of the proposed delegation before the arrangements take
effect. 76 The arrangements must, for example, meet conditions such as:
• the entire delegation structure is justifiable on objective reasons;
• the proposed delegate has sufficient resources, and is properly qualified;
• the delegate performing investment management functions is authorised or registered,
and subject to supervision 77 ; and
• in cases where the delegate is located outside the EEA, there is cooperation between the
FSA and the delegate’s supervisory authority.
7.55 The functions covered by the delegation provisions are specified in the Directive. We
propose to add the defined term ‘AIFM management functions’ to the Glossary to cover
this concept.
7.56 The Directive also contains rules on sub-delegation and restriction on delegating functions
to the depositary or where there may be a conflict of interest with the AIFM or the AIF. We
intend to transpose these requirements in FUND 3.10.4R to 3.10.6R.
7.57 The Level 1 requirements will be supplemented by more detailed requirements in the Level 2
Regulation. We expect it to require that the proposed delegation arrangements be subject to
a written agreement, and that the delegate has proper business continuity planning.
Supervisory cooperation arrangements with non-EEA authorities
7.58 Cooperation between the FCA and the supervisory authorities of a jurisdiction where a
non-EEA delegate is located will be ensured when we have signed a cooperation
75 Article 20 AIFMD.
76 FUND 3.10.2R.
77 The Directive also allows an exemption from this condition with the prior approval of the competent authorities of the home
Member State of the AIFM. Article 20(1)(c). This exemption will be transposed by the Treasury.
Financial Services Authority 57