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

Annex 1
November 2012
CP12/32
Implementation of the Alternative Investment Fund Managers Directive
56. As a result of our proposals in this CP, AIFMs who are members of a banking group caught
by CRD3 and AIFMs doing MiFID investment business under Article 6(4) of the Directive
will be subject to the remuneration regimes of both CRD3 and AIFMD. To alleviate the
burden of compliance with the two regimes, we will produce guidance to the Remuneration
Code to the effect that compliance with the AIFMD remuneration regime will be considered
compliance with the Remuneration Code. Nevertheless, we expect some minor costs
relating to the overlapping regimes, for example, at the remuneration committee of the
group holding company where applicable or supervisory level of AIFMs doing MiFID
investment business.
Table 10: Costs for investment managers from applying the Remuneration Code
Costs Incremental costs
For changing:
• the way remuneration policies are set;
• systems and controls;
• additional data collection;
• reporting; and
• record keeping requirements.
One-off Ongoing
(annual)
£0 – £300,000 £0 – £50,000
Issuing an annual remuneration statement £0 – £100,000 £0 – £30,000
Senior management board or committee time NA £0 – £24,000
Enhanced risk management function NA £0 – £31,000
Adjusting remuneration structures £0 – £47,000 £0 – £50,000
Average of total costs £7,000 £4,000
Median Minimal costs Minimal costs
Impacts of requirements for depositaries
57. The requirements for depositaries have been mentioned in Chapter 9. In summary,
AIFMs will be required to appoint a depositary to carry out cash monitoring, safe-keep
assets and oversee certain operational functions. The Level 2 Regulation is expected to
impose quasi-strict liability, as a result of which the depositary will be liable for the loss
of financial instruments held in its custody.
58. We will also require firms wishing to carry out the regulated activity of acting as a
depositary of AIFs to apply to the FCA for the relevant Part IV permissions, and hold
minimum capital.
59. According to the FSA firm survey, for many AIFMs this is the area of the greatest concern
from a cost perspective. A large number of AIFs (such as private equity, venture capital, and
real estate funds) will have to appoint a depositary of this type for the first time. Concern
Financial Services Authority A1:15