AIFMD goes live

Citco offers complete range of AIFMD services

After several years of preparation, from 22 July 2014 any alternative manager marketing into the European Economic Area (EEA) needs to comply with EEA member state approval/notification requirements under the AIFMD and, in the case of an EEA manager, also be authorized by it’s home state regulator as an AIFM. Citco has implemented its service offerings designed to help clients to comply with the directive, as previously communicated in various client forums and updates.

Citco offers a complete range of AIFMD services. The primary offerings are:

External valuer

The valuation function under AIFMD can be performed by an external valuer or the manager itself (as long as the task is functionally independent from portfolio management).

Notwithstanding the extra cost that managers would incur if they had to perform the valuation function in-house, Citco recognises that investors typically want valuation to be independent of the manager, as far as reasonably possible. Accordingly, Citco is providing external valuer services for funds’ level 1 and 2 asset classes and has entered into multiple client agreements to do so.

To our knowledge, Citco is the only leading administrator to offer external valuer services. Indeed, we understand clients of other administrators had to submit revised VOP forms to the UK’s FCA after naming their administrators as external valuers when in fact they were not offering this service!

Depositary services

Citco Custody Limited is authorised to provide both full depositary and depositarylite services to clients. Most EEA managers actively marketing their funds to EEA investors (as opposed to relying on reverse solicitation) are doing so under AIFMD’s article 36, which requires the appointment of a depositary-lite service provider.

Citco Custody Limited is providing the depositary-lite services of cash monitoring, safekeeping of ‘other assets’ and fund oversight to these managers. In light of Germany, Austria and Denmark’s ‘gold plating’ of AIFMD implementing legislation, Citco is also providing these depositary-lite services to non-EEA managers marketing their funds into these jurisdictions. In addition, Citco Custody Limited is providing full depositary services to EEA clients managing EU-domiciled funds.

Annex IV reporting

All EEA managers managing or marketing funds in the EEA have to file some form of Annex IV report with their home state regulators. Non-EEA managers have to file an Annex IV report with the regulator in each member state where they market funds.

The reporting obligation is live following the first whole calendar quarter after authorisation under AIFMD (or for non-EEA managers, when marketing starts). Some managers will have to file in October 2014, and all firms will have to report by 31 January 2015. Citco’s specialist regulatory reporting team has developed an Annex IV service, designed to help managers comply with these reporting requirements.

The future

Looking forward, as clients are no doubt aware, national regulators and ESMA have yet to provide interpretative advice on a number of AIFMD issues. Citco will continue to monitor regulators’ guidelines and will notify clients if our service offering changes as a result of new guidance.

19th September 2014