The financial crisis has demonstrated how important it is to have in place an effective and robust risk management organisation. In today’s ever more complex business environment investment firms are required to implement sound risk principles and oversight mechanisms. This is not only of interest for individual entities, but for the financial groups overall. The global integration of markets, business and operations triggers an integrated risk management framework. Risk management has become a dominant topic in a number of recent regulations. Whereas in the context of UCITS IV risk management has been confirmed and clearly be expanded beyond the traditional focus on market risk, the Alternative Investment Fund Managers Directive (AIFMD) has now introduced this broad concept of risk management as an integral part of the responsibilities of the alternative investment fund managers (AIFM). In addition to the product specific risk management regulations, the EU regulator prepares new guidelines regarding the trading of OTC derivatives and central counter-parties.
StatPro’s view on the AIFM Directive
With asset managers facing increasing levels of regulation such as AIFMD, as explained above and UCITS IV, pressure is increasing on operating costs and levels of efficiency. The industry needs to ensure it has the right tools for the job in order to realize the opportunities that the right regulations can bring about. Portfolio analysis and compliance tools need to provide a high level overview of the portfolio estate, and have the power and speed to act on potential breaches and limit thresholds. StatPro Revolution provides a central point to monitor and act on changes within the portfolio with transparent methodologies and analysis. Providing both commitment and VaR approach with clear and visual dashboards that enable your entire team to comment on, and close out, any potential breaches and to produce reports ready for the regulator.
AIFMD News and Articles
A selection of AIFMD related articles from the StatPro blog can be found here.
Tackling UCITS and AIFMD with StatPro Revolution
Learn how StatPro Revolution can help your funds meet the requirements of the UCITS and AIFMD regulations with our easy-to-understand guide.
ALFI Risk Management GuidelinesDownload the ALFI Risk Management Guidelines
- FCA Handbook
The Financial Conduct Authority Handbook contains provisions made by the FCA and all instruments that have been passed. It also highlights those yet to be completed such as FCA 2013/54 – Alternative Investment Fund Managers Directive (No 2) Instrument 2013.
- The European Securities and Markets Authority
ESMA’s key AIFMD documents include reporting guidance and templates, MoUs of member states, Q&As and other useful AIFMD summary documentation.
- FCA Policy Statement
Updated with feedback from the latest consultation, the FCA’s Policy Statement looks at the implementation and scope of AIFMD.
- AIFMD Survival Guide
The AIFM Directive Survival Kit, prepared by Linklaters Luxembourg office in 2011 outlines the effect of AIFMD up until 2018.
- The European Commission
The European Commission’s statements, press releases and parliamentary information provide a detailed journey of the directive so far. There is also an extensive Q&A section with the opportunity to post further questions.
- HM Treasury – Transposition of the Alternative Investment Fund Managers Directive: response to consultation
- The Alternative Investment Fund Managers Regulations – legislation.gov (UK)
- The AIF Rulebook – Central Bank of Ireland (Ireland)
- Law of 12 July 2013 on alternative investment fund managers – cssf.lu (Luxembourg)
- The KAGB – Kapitalanlagegesetzbuch – bmjv.de (Germany)
- The AIFM Directive – amf-france.org (France)
Find terms related to the AIFMD in the glossary
- Absolute VaR
- Annex IV Reporting
- Back Testing
- Calmar ratio
- Commitment Approach
- Contribution to Potential Upside (or Component Potential Gain)
- Counterparty Risk
- Do you have the right toolset to tackle UCITS IV?
- Do you know the risk and exposure of your portfolios? - UCITS Infographic
- Event Risk
- Expected Shortfall (or Conditional VaR or CVar)
- Global Exposure
- Management Company Passport
- Master Feeder structures
- Relative VaR (UCITS)
- SRRI (Synthetic Risk & Reward Indicator)
- StatPro releases upgrade to Revolution cloud services
- StatPro Revolution adds ‘commitment approach’ to provide comprehensive AIFMD & UCITS compliance
- Systematic Risk
- Tackling UCITS IV with StatPro Revolution
- Think Global, Act Local
- Undertakings for the Collective Investment of Transferable Securities (UCITS)
- Unsystematic Risk
- VaR approach
Frequently Asked Questions (FAQs) regarding AIFMD
What is AIFMD?
Published in the Official Journal of the European Union in July 2011 the Alternative Investment Fund Managers Directive aims to create a comprehensive and effective regulatory and supervisory framework for alternative investment fund managers within the EU.
What is an Alternative Investment Fund?
An AIF is any structure for collective investment, which raises capital from multiple investors with a view to investing it in accordance with a defined investment policy but is not covered by the UCITS Directive.
Who is an Alternative Investment Fund Manager?
Each fund requires a single manager whose ‘regular business’ is responsible for managing the fund. This means performing at least portfolio management and risk management for the fund. Anyone managing AIFs in the EU will be subject to the provisions of AIFMD.
What is the purpose of the AIFMD?
The EU AIMF Directive looks to improve the stability of financial markets and imposes a common and robust risk management framework as well as additional reporting requirements to better protect investors by increasing transparency.
Who does the AIFMD affect?
The hedge fund directive has a broad scope and captures all AIFMs established in the EU, whether they manage EU or non-EU AIFs. The AIFMD requirements also govern the marketing in the EU of AIFs managed by an AIFM established outside the EU. The impact of the new regulations of non-EU asset managers will depend on where the fund is managed or marketed. It is important to note that a non-EU AIFM marketing outside of the EU and a non-EU fund which invests in EU equities does not come within the scope of the European AIFM directive.
When do I need be AIFMD compliant?
Although the directive has been in effect from July 2013, EU AIFMs have until July 2014 to become authorized and compliant.
What is the result of non-compliance?
As the focus increases on compliance, in addition to monetary fines and reputational damage, non-cooperation will ultimately mean AIFMs will be barred from trading in Europe.
How can StatPro help with AIFMD compliance?
StatPro Revolution is a sophisticated and beautiful, cloud-based portfolio analytics service which can help you meet your AIFMD regulatory and compliance challenges. Benefits include:
- Visual illustration all regulated funds with user defined selections of the calculation method. i.e. Commitment or VaR
- Monitoring of computed results via a traffic light approach
- Risk data service providing automatic coverage for vanilla assets, and complete coverage of OTC in instruments via the submission of the terms and conditions
- Fully customizable set up including: user defined risk limits, a selection of 1,200 stress tests, daily back-testing, liquidity risk analysis, leverage calculation
- Audit trail with user defined validation and comments functions
- Wide range of reports that can be exported to excel or PDF
- Predefined compliant reports for AIFMD
- Export file for filling the ‘Market Risk Profile’ section of the Annex IV transparency report
- Storage reports function so everything is kept
- Complete transparency and drill-down into the commitment approach calculation thereby avoiding the black-box approach
More AIFMD news.
On May 28th in Paris, we joined with PwC for a breakfast seminar to discuss industry progress to date on AIFMD and UCITS, and the challenges being faced.
On 19th February StatPro and PwC presented industry progress to date and discussed the implementation of a Risk Management Process for AIFMD. The briefing highlighted the risk monitoring and reporting challenges faced so far and we demoed StatPro’s award winning AIFMD risk monitoring solution.
View the images from our AIFMD Roundup event with PwC.
In 2014, StatPro ran a series of roadshows across Europe updating our prospects and clients on our award winning solution. StatPro’s risk monitoring solution is detailed in the slides available below but for more information please request a demo.
As part of the events we asked attendees their views on AIFMD. Read StatPro’s regulatory compliance confidence indicator.
View the images from our StatPro Live: Tackling AIFMD event.
Download the Tackling AIFMD and UCITS with StatPro Revolution slides: