On 19 August, the European Securities and Markets Authority (ESMA) published a letter (ESMA34-32-550) dated 18 August that it had sent to the European Commission, outlining areas it should consider during the forthcoming review of the Alternative Investment Fund Managers Directive (AIFMD).

ESMA’s letter includes recommendations for changes in 19 areas that ESMA and competent national authorities have gathered experience in since the AIFMD came into effect in 2011. These areas include, but are not limited to:

• Harmonising the AIFMD and Undertakings for the Collective Investment in Transferable Securities (UCITS) regimes;
• Delegation and substance;
• Liquidity management tools;
• Leverage;
• The AIFMD reporting regime and data use; and
• The harmonisation of supervision of cross-border entities

ESMA cites in its letter that the review of AIFMD provides the EU with an opportunity to apply the lessons that have been learned. Policy enhancements are proposed in Annex I to the letter and reporting recommendations are made in Annex II. Many of the recommendations made also require consideration of changes to the UCITS legislative framework.

ESMA encourages the Commission to support the areas identified in the letter in order to improve the effectiveness and soundness of the AIFMD.