EUROPEAN UNION: ESMA publish updated AIFMD Q&A

Wednesday July 20 2016

The European Securities and Markets Authority (ESMA) has published an updated questions and answers document (Q&A) on the application of the Alternative Investment Fund Managers Directive (AIFMD).

The Q&A provides new guidance on OTC financial derivative transactions that are centrally cleared and subject to the reporting obligation of EMIR. It is clarified that Alternative Investment Fund Managers (AIFMs) cannot rely on the valuation provided by the central counterparty (CCP).

The AIFMD framework requires AIFMs to have in place a process for proper and independent verification of the value of the OTC financial derivative transactions, even if they are centrally cleared. The valuation provided by the CCP can only serve as a point of reference for the verification performed by the AIFM. Nevertheless, the AIFM should be able to justify any deviation from the valuation provided by the CCP.

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