The Alternative Investment Fund Managers Directive (AIFMD) is aimed at harmonising the way in which fund managers are regulated and operate within the European Union (EU). One new aspect that is arriving for AIFMs is the need to provide regular reporting to their Competent Authorities (CAs) and to make these reports available to investors upon request.

UBS has launched a depositary ‘lite’, or depo-lite, platform to support managers of offshore funds in fulfilling their Alternative Investment Fund Managers Directive (AIFMD) requirements. The depo-lite will conduct cash flow monitoring, safekeeping and general oversight (of the valuation process, subscriptions and redemptions, compliance with laws and regulations, investment restrictions and leverage) requirements as per the Directive. EU fund managers need to comply with the depo-lite regime in order to be able to market their non-EU, offshore funds within the EU.

ESMA (European Securities and Markets Authority) has written a letter to the EC (European Council) asking for further clarification as to what constitutes a derivative and derivative contracts. It has become clear that there is no harmonised definition across the 28 EU (European Union) states, since the definition of a derivative is derived from MiFID (Markets in Financial Instruments Directive) and there are varying transpositions of this directive across Europe.

When the trade reporting mandate goes live on 12 February, market participants will have the option to fulfil their obligation via outsourcing to third party reporting providers and delegated reporting models. This move makes sense for those participants that do not have the IT infrastructure for the collation of data for reporting. It also makes sense for those participants with high volumes. The process of gathering and enriching the data for reporting on a T+1 data is not necessarily straightforward, so it makes a degree of sense to offload this burden.

Next Wednesday, 12 February, the European trade reporting mandate under EMIR will go live. The six ESMA approved entities that have been granted trade repository status will start accepting the trade data of market participants across Europe and making that data available to the national competent authorities that are responsible for overseeing this.