Published on November 25 by the European Commission (‘Commission’), the legislative proposal amends, among other things, the Alternative Fund Managers Directive (AIFMD – Directive 2011/61/EU) and the Undertakings for Collective Investment in Transferrable Securities (UCITS – Directive 2009/65/EC) Directive.

The changes focus on delegation arrangements, liquidity risk management, supervisory reporting and the regulatory treatment of depositary and custody services. AIFMD alone would be amended as regards activities of loan-originating investment funds and access to depositary services across borders.

The breakdown of the changes includes:

• Harmonisation of the rules for the managers of alternative investment funds (‘AIFMs’) managing loan-originating AIFs, to clarify standards applicable to AIFMs that delegate their functions to third parties.

• The UCITS framework will be aligned with AIFMD by requiring that UCITS management companies justify their entire delegation structure.

• AIFMs’ list of authorised ancillary services will be extended to include benchmark administration and credit servicing.

• AIFMs will be required, at the time of application for an authorisation, to provide to competent authorities with information about the human and technical resources that the AIFM will employ to carry out its functions and, where applicable, to supervise delegates.

The legislative proposal is now subject to the EU legislative review process before it is agreed and published in the Official Journal of the EU. Member States will have 24 months after the entry into force of the directive to transpose the new rules into national legislation.