The European Securities and Markets Authority has issued a fresh update on May 12 to its Questions and Answers document containing guidance and interpretation of the EU’s Alternative Investment Fund Managers Directive as well as the European Commission’s delegated regulation on implementation of the directive issued in December 2012 and May 2013.

ESMA says the Q&A document, first issued in February 2014 and since updated seven times, is designed to promote common supervisory approaches and practices in the practical application of the AIFMD and its implementing measures through responses to questions posed by the general public and regulators themselves. It complements a Q&A document on the AIFMD published by the European Commission.

The ESMA Q&A covers remuneration, notification of alternative investment funds and their managers, reporting to national regulators, services covered by MiFID, depositaries, calculation of leverage, delegation, calculation of assets under management, additional own funds, and scope of the authorisation requirement.

The latest version principally updates information regarding regulatory reporting requirements, as well as calculation of leverage. The previous update, issued on March 26, covered reporting, notification of managers, calculation of leverage, calculation of additional own funds, and the scope of the authorisation requirement.

• ESMA says the reporting requirements apply to all alternative investment managers for the fund they manage and or market within the EU, regardless off whether they are sister companies or owned by another AIFM, according to the reporting frequency set out in Article 110 of the implementing regulation.

• Managers of private equity funds should consider actual capital drawdowns rather than commitments when they report information on fund subscriptions.

• Once a registered AIFM has opted in under the directive it must comply fully with its requirements, including reporting to its national regulator, but opting in does not impact its reporting frequency, which should remain on an annual basis unless total assets under management exceed the Article 110 thresholds. In member states where all AIFMs must be authorised, sub-threshold managers must report the information required under in Article 24 of the directive.

• Non-EU AIFMs whose total assets under management do not exceed the thresholds set out in Article 3(2)(a) and (b) and that market their funds in the EU through a national private placement regime should report at least the information listed in Article 3(3)(d) of the directive to the regulators of the jurisdictions where the funds are marketed. National private placement regimes may require non-EU AIFMs to report additional information.

• Where a fund invests exclusively in assets denominated in its base currency, the manager should report long and short positions in that currency.

• AIFMs should not consider the distribution of dividends as redemptions for the purposes of the consolidated reporting template.

• Managers should not apply the same reporting frequency to sub-funds of the same umbrella fund structure; each must be considered separately in respect of reporting requirements.

• AIFMs should take into account cash and cash equivalents in reporting the main instruments in which the fund trades and the five most important portfolio concentrations.

• The procedure for the first reporting of funds should be the same as for that of AIFMs, as set out in ESMA’s guidelines on reporting obligations under Articles 3(3)(d) and 24(1), (2) and (4) of the directive.

• When calculating their exposure under the commitment approach under Article 8 of the implementing regulation, AIFMs should take into account the absolute value of all positions of their funds in accordance to the criteria set out in the AIFMD and the regulation. For derivative instruments, managers should convert each position into an equivalent position in the underlying asset using the methodologies set out in the directive and regulation.

• Information on the long and short value of exposures should be provided in the base currency of the fund.

Non-EU managers marketing their funds in the EU under Article 42 should report the results of stress tests where this is required by the private placement regime of the member states where the funds are marketed, or if the managers have carried out such stress tests.

An AIFM that is already managing funds in a host member state under Article 33 of the directive does not have to undertake a new notification under Article 33(2) of the AIFMD every time it wishes to manage a new fund in that member state. The original notification is valid for all funds, but an update under Article 33(6) should be sent to identify each new fund, clarifying if necessary that the new fund is of a different type from those specified in the original notification.

• When calculating the exposure of a fund using the gross method under Article 7(a) of the implementing regulation, AIFMs should exclude the value of all cash held in the base currency as well as cash equivalents.

• In calculating own funds under Article 9(3), AIFMs should exclude investments by their funds in other AIFs they manage. However, they should not exclude investments in other funds they manage for the calculation of additional own funds to cover potential liability risks arising from professional negligence, because investment in other AIFs run by the same manager increases the operational risk.

• Under Article 36(1) of the AIFMD, member states may allow an authorised EU AIFM to market to professional investors on their territory the units or shares of EU-domiciled feeder AIFs with a non-EU master fund managed by a non-EU AIFM. Whether the non-EU manager must be authorised depends on how the member state has transposed Article 36 into national law.

ESMA’s Q&A document can be consulted at, while the European Commission has published its own list of issues and responses at