AIFMD, UCITS IV and their potential successors : changing regulatory and operational landscapes

Abstract

This study has as its subject two European Directives, namely the latest incarnation of the Directive on Undertakings for Collective Investment in Transferrable Securities (UCITS IV) and the Alternative Investment Fund Managers Directive (AIFMD). The principal aim of the study is the evaluation and analysis of the regulatory and operational changes which will be brought about by the two directives. The importance of tackling the AIFMD and UCITS IV in the same study lies principally in the fact that the AIFMD practically covers all the funds not covered by the UCITS IV Directive, with certain limited exceptions. In other words, these directives collectively regulate the European fund industry. The study does not only look at the regulatory issues and ramifications of the Directives, but also delves, albeit to a limited extent, into the operational implications and effects that these have both on funds and their service providers. Both Directives require an appreciable change in the manner in which service providers and fund promoters go about their business. Both have introduced benefits which will be enjoyed by the industry players, investors and the economy at large, however they also place onerous requirements on the funds themselves and their services providers. They will require service providers to change the way they conduct their operations. The study sheds some light on the possible ramifications and repercussions of these operational changes. On a general note, the study may be said to have revealed that the balance is tilting towards investor protection and the avoidance of systemic and other risks, to the detriment of flexibility. The Directives impose a number of requirements and restrictions which might be seen as disproportionate or too onerous in certa