It has been one week since the Alternative Investment Fund Managers Directive (AIFMD) went live in Europe. The Directive was implemented 12 months previously, but the grace period of one year has now expired. So what next?

One of the major issues still to be resolved ahead of the 22 July implementation deadline for AIFMD (the Alternative Investment Fund Managers Directive) is that of asset segregation at third parties of depositary banks. Under the directive, depositaries will be forced to assume strict liability for the restitution of lost fund assets in their counterparty network.

Depositary banks and prime brokers are eagerly awaiting the much anticipated decision by ESMA (European Securities and Markets Authority) as to whether prime brokers will be forced to segregate AIF assets from their own and other clients under AIFMD (Alternative Investment Fund Managers Directive).

The trade reporting mandate, which went live on 12 February 2014, has provided an added layer of cost to energy traders that will see ‘seven figure sums’ spent each year on reporting spot, futures and derivatives transactions to EMIR (European Market Infrastructure Regulation) authorised trade repositories in Europe. The data has come from EFET (the European Federation of Energy Traders), an Amsterdam-based industry group that represents a group of over 100 energy traders.

Luxembourg has established itself as the most popular place for UCITS funds to domicile themselves and is shaping up to take a similar share of the AIFMD market as assets under management in the country ticked over to EUR2.6 trillion in 2013.

“Europe is back on the radar for US and Asian investors,” declared H.E. Pierre Gramegna, Luxembourg’s minister of finance at the London leg of the Association of the Luxembourg Fund Industry’s (ALFI) 2014 road-show. “This is good news for Luxembourg and European funds,” he declared.