AIMA/ACC publish paper on new prudential regime for investment firms

Published: 16 April 2018


AIMA and the Alternative Credit Council (ACC have published a position paper on the European Commission’s proposals to review the prudential regime applying to investment firms. AIMA and ACC have put forward detailed amendments addressing key issues identified by our members, which mainly relate to the overall calibration of the capital requirements, category thresholds and remuneration provisions for MiFID-licensed asset managers and to the importance of maintaining a level-playing field with asset managers subject to other regulations (UCITS and AIFMD).

Specifically, we commented on:

k-Factors double-counting: We have raised the fact that, under the Commission’s current proposals, MiFID-licensed asset managers would be subject to two (k-AUM and K-CMH) and possibly three (k-COH) k-factors, all applying to the same assets, which seems overly burdensome for an industry which bears almost no balance-sheet risks.

Remuneration requirements: We have reiterated the specificities of our industry and the fact that many risks linked to incentives and compensations are already mitigated by the inherent alignment of interests between fund managers and their investors/clients. Our industry’s business model makes many remuneration policy instruments redundant, or worse, counterproductive. We also mentioned our concerns regarding the public reporting requirements which do not seem justified in a sector mainly comprised of private, non-listed firms.

Class threshold: We commented on the fact that many of the thresholds determining whether a firm belongs to Class 2 or Class 3 are too low and do not properly reflect the risks associated to these firms

Transitional requirements: We noted that the Commission is due to publish a report on the impact of the new framework and we recommended that the transitional period shall extend until such time as the Commission, following the results of its report, determines that the transitional period is no longer needed.

We will engage with policy-makers on this report in the weeks come and will share updates with members. Should you have any questions, please contact Marie-Adelaide de Nicolay.