On 20 July, the European Commission announced political agreement between the European Parliament and the European Council on proposed amendments to the EU’s Alternative Investment Fund Managers Directive (AIFMD). This follows the Commission’s proposal in the form of a draft directive amending AIFMD (AIFMD 2) issued in November 2021, protracted negotiations between the Commission, the Council and the European Parliament since 8 March of this year, and the issuance in June of a compromise text by the Council.

AIFMD 2 seeks to implement targeted reforms to the AIFMD regime, which regulates EU managers of funds (other than UCITS) and managers who market funds into the EU. Amongst other things, the reforms aim to harmonise the rules on liquidity management tools, establish common rules for loan-originating AIFs and change the present delegation framework to include greater regulator oversight and reporting in relation to delegated activities. Crucially, the proposals will continue to allow delegation of portfolio and risk management outside of the EU, meaning EU AIFs may still be managed by non-EU investment managers – a position that had been considered threatened immediately post-Brexit.

It will be some time before AIFMD 2 is finalised and published in the Official Journal of the EU. Even then, member states will have 24 months from its entry into force to transpose the requirements nationally. This political agreement between the European Parliament and the Council is nonetheless a very positive indication of progress and will hopefully provide certainty on AIFMD 2 changes.