The EU’s revised Different Funding Fund Managers Directive (AIFMD II) will come into drive this month, introducing modifications to threat retention, leverage caps and liquidity limits for funds.
The up to date framework, which follows the unique AIFMD, is ready to come back into impact from 16 April 2026, with its most important affect anticipated to fall on loan-originating funding funds.
Chatting with companions Mikhaelle Schiappacasse and Katie Carter at regulation agency Dechert, the important thing areas of change for fund managers embody new guidelines on threat retention, liquidity threat administration, leverage limits and focus limits.
Schiappacasse instructed Different Credit score Investor (ACI) that probably the most impactful rule modifications shall be “the leverage cap and the chance retention requirement”, explaining that “it’s not one thing managers needed to do earlier than”.
Carter defined that the reforms are aimed toward enhancing transparency, mitigating systemic threat and enhancing investor safety.
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“This [AIFMD II] comes out of the shadow banking evaluation that the European regulators did fairly quite a lot of years in the past now, the place they have been expressing concern in regards to the quantity of lending exercise that was happening within the non-banking house,” she mentioned.
Each Carter and Schiappacasse acknowledged that the brand new guidelines are prone to have a restricted affect on closed-ended funds, however a higher impact on open-ended autos, which might want to revisit their liquidity administration instruments.
They added that, to some extent, the regulation could start to affect whether or not funds are structured as open-ended or closed-ended.
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Nevertheless, Schiappacasse doesn’t suppose the brand new guidelines will curb the expansion of evergreen autos. “They’ll simply be extra delicate to how they construction [their funds], and the redemption phrases and the subscription phrases,” she mentioned.
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