It is an independent provider of management company (UCITS and AIFMD) and consulting services. This is some contrast to the AIFMD which require systems that measure manage and monitor those risks to which the AIF “is” exposed. This is in part motivated by a need to determine if the UCITS approach to risk management, effectively to determine risk figures for board oversight on a quarterly basis, is appropriate for AIFM’s .This determination is best done by comparing and contrasting the different sets of legislation. No such discretion is mentioned in the AIFMD legislation.In conclusion, it is clear that whilst there are a number of similarities in the language used to describe the actions of the risk management function between UCITS and AIFMD, there has been a significant addition to the burden of monitoring, managing etc the risk profile of an AIFM vis-a-vis a UCITS and a significant diminution of the flexibility that a UCITS had to interpret the required risk management oversight.As such it is clear that a UCITS type approach to risk monitoring, managing and reporting is wholly inconsistent with AIFMD, and that it effectively requires that the hierarchically and functionally separate risk management function that is necessary under AIFMD must be monitoring and managing the risk profile of the fund at all times.Have any questions? This is in contrast to the AIFMD legislation where the permanent risk management function shall, Article 39, paragraph 1b:The net effect of paragraphs 1a and 1b are that the permanent risk management function must ensure that on an ongoing basis, the risk profile is consistent with the risk limits. KB Associates has advised on some of the most significant fund launches and supports UCITS, AIFMD compliant funds and Cayman hedge funds.Would you like to join our professional team of consultants?The Central Bank of Ireland (“CBI”) guidance on Fund Management Company Effectiveness (CP86) by fund…KB Associates’ activities are underpinned by adherence to its three core values KB Associates’ activities are underpinned by adherence to its three core values Total net assets of UCITS and AIFs declined by 11.6% in Q1 2020 with the Covid-19 driven market crash accounting for 94% of the decline The briefing is designed to provide NCAs such as the CBI with guidance of how costs are charged to investors by UCITS and AIFs.This site uses cookies to improve your experience and analyze site traffic. There is no doubt that much of the language regarding risk management is similar between the two directives, however it is in studying the differences that insight may be obtained.Within the UCITS Directive 2010/43/EU (p2) it is stated that the risk management process must satisfy Article 51 of Directive 2009/65/EC. ESMA recommends post-Brexit UCITS and AIFMD changes in ‘attack on London’ – Investment Week The Rolling Stones to open flagship store in … between AIFMD/UCITS and MiFID in order to ensure that entities providing similar types of services, such as marketing, are subject to similar regulatory standards. The European Securities and Markets Authority (ESMA) has said the Alternative Investment Fund Managers Directive (AIFMD) review is a chance to consider “greater harmonisation” of the UCITS and AIFMD regimes. The fifth Undertakings for Collective Investment in Transferable Securities (UCITS V) directive – transposed into national EU laws on 18 March 2016 – and the Alternative Investment Fund Manager Directive (AIFMD) are reshaping the operational landscape of the European investment funds market. Paragraph 2 states:The key difference between the two texts is that UCITS requires a “risk management process” that “enables it to monitor, measure at any time” whereas the AIFMD legislation require “risk management systems” that will be used “in order to identify, measure, manage and monitor all risks … to which each AIF is or may be exposed”. This is not consistent with a periodic assessment of the risk of a fund.In terms of consistency between the two approaches, it would appear at first glance that UCITS Article 40 and AIFMD Article 45 have the greatest similarity. However in contrast to the concept of risk management “on an on-going basis”, Article 38, paragraph 2 of 2010/43/EU states:In other words, within a UCITS fund it is necessary to be able to determine risk, but the frequency with which this is carried out is at the discretion of the board.
DMS offers both AIFM and UCITS Management Company solutions via a hosted solution on a DMS Platform or standalone solutions on a dedicated client umbrella. In contrast the UCITS legislation require compliance with a “risk limits system” which is described as :The clarity with respect to reporting is further diminished by UCITS Article 38, paragraph 2 which statesor in other words the frequency of reporting of risk is at the discretion of the board.
Furthermore AIFMD Article 39, paragraph 1c requires that the permanent risk management function:There is no corresponding language in the UCITS legislation requiring the risk management to act “in a timely fashion”. The objective of both directives is to implement a framework for the regulation and supervision of investment funds, to increase transparency and ensure greater investor protection.Market participants, in particular those appointed as depositary banks, are facing significant operational and legal challenges which may affect their operating model, including their use of market infrastructure providers.Since 2015, Clearstream has been offering two comprehensive reports to support depositary banks in effectively monitoring the performance of the underlying custody chain and in assessing the risks they could be exposed to in relation to transfer agents (TAs), registrars and processing agents: The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers on the application of the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS) and the Alternative Investment Fund Managers Directive (AIFMD).