3 big questions on AIFMD and depositories

In preparation of the coming into force of the Alternative Investment Fund Managers Directive, Andrew Shrimpton, Global Head of Regulatory Compliance and member of the executive board at Kinetic Partners, and I were asked to turn our thoughts to how depositories could be affected. Duncan Wood of Lexis Nexis zoomed in on 3 areas, first asking Andrew…

…what are the implications as regards liability?

The vast majority of hedge funds are domiciled outside the EEA. Non EEA-AIFs managed by a UK AIFM or marketed to EEA investors under art 36 of AIFMD are not subject to the liability provisions in AIFMD art 21.

And, will there be a change in operating models?

Yes, according to Andrew. The three core depository activities of ‘oversight’, ‘cash monitoring’ and safekeeping under art 36 or the ‘depository-lite’ regime can be undertaken by separate entities or art 36 custodians. Kinetic Partners envisag