29.05.2015 | KPMG Law Insights

Alternative Investments Legal – Alternative Investments Legal | Issue 4/2015

Dear Readers,

BaFin has changed its administrative practice regarding the granting of loans by investment funds. In addition to restructuring and prolongation, this now also allows the KVG to grant loans for AIFs. In addition, BaFin is consulting on the draft of an ordinance amending the Bearer Control Ordinance. The start of AIFMD reporting will be postponed again, according to BaFin. Based on current information, reports due will not be requested before August 1, 2015.

At the European level, ESMA is consulting on new guidelines for assessing the competencies of staff providing information on financial instruments. In particular, this also includes KVGs if they provide investment advice or individual portfolio management. Furthermore, EIOPA has updated its website. All the necessary documents, especially for the regulatory approval process, can now be accessed there.

We would also like to draw your attention to the KAGB Day, which will be held on June 23, 2015 in Frankfurt am Main and co-organized by KPMG. Numerous current topics relating to alternative investments are discussed there.

It remains for us to wish you a great start to the first month of summer 2015.

With best regards

Dr. Ulrich Keunecke

BaFin changes administrative practice on the granting of loans by investment funds

BaFin liberalized its administrative practice in a letter dated May 12, 2015. In addition to the modification of existing loan receivables (loan restructuring or prolongation), it now also expressly permits the granting of loans by KVGs for AIFs. Our colleagues at KPMG Law and KPMG AG provide cross-functional support in setting up and structuring debt funds and investing in such a vehicle.

ESMA consults on guidelines for assessing staff competence

ESMA has published a consultation paper on assessing the knowledge and competencies of staff providing investment advice or informing clients about financial instruments. In the future, the guidelines will also apply to KVGs – provided they perform ancillary services such as individual portfolio management or investment advice.

The following requirements, among others, shall apply to employees:

  • Understanding of the key features and risks of the products offered, including the overall fiscal impact;
  • Knowledge of the costs to be borne by the customer;
  • Basic understanding of how the market works and the impact of economic indicators on price trends and the value of the products offered.

Employees who have worked in a company in the relevant areas of work for at least five years without interruption should be able to be classified as appropriately qualified by the competent national supervisory authorities.

KVGs and investment service providers should review and evaluate the relevant staff at least annually and provide for their training and development.

The submission period ends on July 10, 2015.

BaFin consults on draft ordinance amending the Bearer Control Ordinance

On May 8, 2015, BaFin published for consultation a draft of a second ordinance amending the Owners’ Supervision Ordinance and the associated leaflet on the procedure and notifications pursuant to Section 2c KWG and Section 104 VAG. Furthermore, the Federal Ministry of Finance will no longer obtain excerpts from the Federal Central Register and the Central Trade Register in the future. Accordingly, the draft bill provides that persons subject to notification must submit these documents themselves.

The consultation period ends on June 5, 2015.

ESMA presents updated FAQ on the AIFM Directive

On May 12, 2015, ESMA published an updated FAQ on the AIFM Directive. There are new developments in the areas of reporting and notification requirements as well as in the calculation of leverage.

On April 29, 2015, the EU Parliament voted in favor of stricter rules for money market funds, amending the EU Commission’s proposal. It thus approved the tightening of numerous regulatory requirements in line with the ECON decision of February 26, 2015. Accordingly, money market funds may not invest more than five percent in money market instruments of one issuer. Investments in units of other money market funds are expressly prohibited.

There are also stricter reporting requirements vis-à-vis supervisory authorities and investors. It is also planned to introduce quarterly stress tests based on criteria such as liquidity or interest rate level changes. In addition, the permissible fixed assets have been restricted. The Commission already announced that it would not support all of the EU Parliament’s amendments.

BaFin adjusts fund category guideline

BaFin has published a revised version of the “Guideline for the Determination of

Fund categories according to § 4 par. 2 KAGB and further transparency requirements for certain fund categories” published. Accordingly, capital management companies are to ensure for money market funds managed by them that they carry out their own credit quality assessment.

Where one or more credit rating agencies registered with and supervised by ESMA have provided a credit rating for the money market instrument, the internal rating process of the investment management company should refer, inter alia, to those credit ratings.

The amendment serves the purpose of clarification. ESMA has requested the national supervisory authority to take into account in its supervisory practice the amendments to the CESR Guideline on money market funds regarding the reference to external ratings, which were already adopted by the European supervisory authorities at the beginning of 2014.


EIOPA updates Solvency II website

EIOPA referred to its updated Solvency II website in a press release dated May 6, 2015. This provides easy access to the regulatory framework at all levels.

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Dr. Ulrich Keunecke

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