The Alternative Investment Management Association and its private credit affiliate the Alternative Credit Council say the provisional political agreement reached on the EU’s Alternative Investment Fund Managers Directive (AIFMD) Review provides regulatory stability for alternative investment industry.

The Alternative Investment Management Association and its private credit affiliate the Alternative Credit Council say the provisional political agreement reached on the EU’s Alternative Investment Fund Managers Directive (AIFMD) Review provides regulatory stability for alternative investment industry.

Under the agreement, rules on delegation and liquidity management remain targeted and validate established practices that both policymakers and asset managers agree work well.  

However, the agreement also introduces tougher regulation of loan origination funds (LOFs) aimed at addressing financial stability concerns, including new rules on liquidity risk management, leverage and retention of loans to avoid ‘originate-to-distribute’ models. 

Jiri Krol, Deputy CEO and Global Head of Government Affairs, AIMA said: “We welcome most of the new rules on delegation, liquidity risk management and passporting for loan origination funds as relatively sensible. Some restrictions, such as leverage limits on loan funds, are difficult to justify but we have worked closely with policymakers to ensure they are better defined and calibrated than the original proposals.”

Krol added: “As usual, it’s a mixed bag and we hope the positive elements will outweigh the negatives. This agreement will provide our members with greater certainty on the future regulatory framework and allow them to focus on delivering returns to investors and capital to the economy.”

Deborah Zurkow, Chair of the Alternative Credit Council and Global Head of Investments at Allianz Global Investors, commented: “While some of the reforms introduced will support that activity, others will act as a brake. Policymakers need to nurture the sector and the ACC will continue to engage with them to ensure our members can provide much-needed capital as traditional sources of finance become less accessible.”