{"id":989,"date":"2024-09-25T14:15:20","date_gmt":"2024-09-25T14:15:20","guid":{"rendered":"https:\/\/iqeq.com\/fr\/insights\/whats-the-latest-on-aifmd-2\/"},"modified":"2024-09-25T14:15:21","modified_gmt":"2024-09-25T14:15:21","slug":"whats-the-latest-on-aifmd-2","status":"publish","type":"post","link":"https:\/\/iqeq.com\/fr\/insights\/whats-the-latest-on-aifmd-2\/","title":{"rendered":"What\u2019s the latest on AIFMD 2?"},"content":{"rendered":"
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By F\u00e8my Mouftaou, Managing Director, IQ-EQ Fund Management, Luxembourg\/Head of Fund Management, France, and Justin Partington, Global Head of Fund and Asset Managers<\/em><\/p>\n

Earlier this year, a hugely important set of financial rules were quietly published by the European Union. Indeed, after a long period of intense negotiations between the European Commission, the Council of the EU and the European Parliament, the text of the directive<\/a> to amend AIFMD, dubbed AIFMD 2, was published in the Official Journal of the EU on 26 March this year.\u00a0<\/strong><\/p>\n

Just 20 days later the new rules, which bring with them a host of key changes that participants in private markets will need to abide by, came into force.<\/p>\n

Member states have 24 months to transpose the provisions into national law, meaning that AIFMD 2 will not in reality take effect until the spring of 2026.<\/p>\n

Nevertheless, the rules have immediate and important ramifications for the market and, at the very least, participants will need to begin familiarising themselves with the changes in advance of the go-live date.<\/p>\n

UK to go its own way<\/h2>\n

For starters, as the UK is no longer part of the EU, the new rules mean that the AIFMD regime in the UK will now differ materially from the EU for the first time. This change will take place once AIFMD 2 is implemented by EU member states in the run up to 15 April 2026.<\/p>\n

What\u2019s new?<\/h2>\n

AIFMD 2 introduces a new loan origination funds passport, makes changes to liquidity risk management and establishes new portfolio management delegation rules – changes that will not be reflected in the UK.<\/p>\n

And it doesn\u2019t look like this will alter any time soon, with the UK not proposing – at least not publicly – to adopt the AIFMD 2 adjustments within its own framework. The Financial Conduct Authority (FCA), the UK financial regulator, is in the middle of a review of the rules governing asset management, and UK AIFMD will be examined as part of this. The FCA has said its objectives are to ensure the regime for AIFMs and investment firms is more proportionate to encourage the competitiveness of the UK as a jurisdiction for asset managers.<\/p>\n

While AIFMD 2 will not apply to AIFMs from the UK, it will impact UK managers that use the services of host AIFMs in the EU and will have implications on their cross-border business models when marketing into the EU and acting as delegates.<\/p>\n

Some EU member states, such as Luxembourg, Ireland and France, meanwhile, are expected to embrace the new rules with little fuss.<\/p>\n

Luxembourg was the first nation to transpose the original AIFMD into law in 2013, which gave the jurisdiction an important competitive advantage, and so regulators in the Grand Duchy are well aware of the benefits of moving quickly when it comes to the latest iteration of AIFMD and adopting the new version of the directive sooner rather than later.<\/p>\n

Meanwhile in Ireland, the Central Bank of Ireland established the domestic loan-originating qualifying investor AIF (LQIAIF) regime in 2014. The amendments to AIFMD 2 related to loan origination borrow heavily from the existing LQIAIF regime and therefore shouldn\u2019t present any significant surprises for existing managers of such Irish funds. As such, it\u2019s expected that Ireland’s reputation as a domicile for loan origination funds will continue to go from strength to strength.<\/p>\n

So, what\u2019s changed with loan origination?<\/h2>\n

AIFMD 2 now explicitly enables EU AIFMs to engage in loan origination and EU AIFs run by an EU AIFM will be able to carry out loan origination across all EU member states, covering off current inconsistencies in some countries.<\/p>\n

There are several rules that AIFMs must comply with in relation to loan origination. The principal rules include:<\/p>\n