FSA launches first consultation on AIFMD

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The FSA has published its first consultation paper on the implementation of the Alternative Investment Fund Managers Directive.

The consultation, which will close on 1 February 2013, will aim “to provide clarity” for firms on areas where the UK can apply its own requirements.

The City regulator has made proposals in the areas where there is sufficient certainty to consult.

Under the proposals, the regulator is to require internally-managed alternative investment funds hold own funds or professional indemnity insurance on top of initial capital of €300,000 when first authorised.

The regulator is also proposing companies hold more capital in certain circumstances, in case of gaps in indemnity insurance or if it is not convinced by an asset manager.

The FSA is also proposing that liquid assets requirements for alternative investment funds refer to assets that can be realised within one month, which it would also plans to roll out to Ucits firms.

FSA head of conduct policy Sheila Nicoll says: “We want to give firms as much time as we can to consider our proposals and prepare for implementation.

“Work is continuing at EU level and there are still uncertainties around aspects of AIFMD.”

She adds: “However, there are a number of areas where we do have certainty and we have focused on these in our consultation.

“Where we can, we will take a flexible approach that seeks to avoid imposing requirements which go beyond those of the directive.”

The FSA has estimated that the one-off costs of implementing the European directive by the regulator will be around £5m.

The total costs to firms from authorisation could reach from £220,000 to £5.1m. One-off operational costs could reach £480,000, while ongoing operational costs could reach £1.2m.