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

CP12/32
Implementation of the Alternative Investment Fund Managers Directive
Annex X
9.16 This means that existing depositaries of NURS and QIS would be subject to a higher
capital requirement than a MiFID firm (i.e. a ‘BIPRU 730K firm’) that chose to become a
depositary under AIFMD. We propose a new rule (FUND 3.11.13R) 114 requiring any
MiFID firm acting as a depositary for an authorised AIF to hold £4m fixed capital, thus
making it subject to the same capital requirements as other firms performing the same
activity. New depositaries that do not wish to act for authorised AIFs will not be subject to
any national requirements on capital over and above the EU regimes specific to credit
institutions or MiFID firms, as set out in GENPRU and BIPRU.
Q8: Are the proposed capital requirements for firms that act as
depositaries for authorised AIFs fair and appropriate?
The ‘private equity (PE) AIF depositary’ model
9.17 We explained in DP12/1 that for certain types of AIF 115 the role of depositary may also be
performed by an entity which ‘is subject to mandatory professional registration recognised
by law or to legal or regulatory provisions or rules of professional conduct’. Recital 34
adds that Member States may allow a notary, lawyer, registrar or other entity to be
appointed, in accordance with current practice for certain types of closed-ended funds.
9.18 We asked whether firms such as lawyers, accountants or fund administrators intend to offer
this type of depositary service, and what prudential regime or other regulatory requirements
should apply. 116 There were no responses to this question from professional firms such as
accountants or lawyers, although a few firms providing specialist administrative and
accounting services to private equity and real estate funds indicated their interest and
responded to our questions, as did several others. A common theme in the responses was a
concern that many smaller fund managers may struggle to find a suitable depositary for
their funds unless more firms are able to offer the service at a competitive price. That, in
turn, would depend on whether the capital requirements for such firms were set lower than
for depositaries of authorised funds.
9.19 The UK Authorities consider there is sufficient support for this option to justify
implementing it, as explained in the Treasury consultation document. We must determine
exactly which categories of firm can benefit from this derogation and what requirements
should apply to them. For convenience we refer in this chapter to ‘PE AIF depositaries’, since
private equity funds are typical of the type of fund the regime is designed for (although some
PE funds might not fit the specification, whereas some other types of fund will).
114 This rule is in FUND because it derives from the AIFMD. The MiFID firm will also be subject to the requirements in GENPRU and
BIPRU, which derive from the application of the CRD.
115 AIFs which ‘... have no redemption rights exercisable [for] five years from the date of the initial investments and which, in
accordance with their investment policy, generally do not invest in assets that must be held in custody...or generally invest in issuers
or non-listed companies to potentially acquire control over such companies...’. Article 21.3(c) AIFMD.
116 Question 40 of DP12/1.
72 Financial Services Authority November 2012