Chapter 5: Alternative Investments Flashcards
Which employees should the remuneration committee of an AIF is responsible for overseeing their remuneration arrangements?
Risk and compliance officers.
When should assets of an AIF need to be valued at a fair price?
At least:
• On the dates at which distribution and redemption or repurchase of its units takes place, and
• On the date mentioned in the AIF’s annual and half-yearly reports.
What should CySEC report for AIFs marketed to retail clients?
CySEC needs to report the types of AIF that may be marketed to retail investors in the Republic and the additional requirements they have imposed.
When the authorization of an AIFM may be withdrawn?
If it is deemed that continuation of its activities may jeopardize the interests of the AIFs that it manages, its clients or the investors or in general the smooth operation or the integrity of the market.
What should be done if the AIF does a transaction with the depositary?
If the depositary is a party to the transaction or in the event that a depositary is not appointed, the external manager shall nominate an independent expert in order to value the assets concerned.
What should AIFMs do to avoid conflict of interest?
Segregate tasks and responsibilities which may be regarded as incompatible and which may potentially generate systematic conflicts of interest.
To which categories of staff does the remuneration policy apply?
Whose professional activities have a material impact on the risk profiles of the AIFM or the AIFs it manages.
What is the main characteristic of the risk management procedures of AIMs?
The risk management department of an AIFM needs to be functionally segregated form the operating units.
When do AIFMs calculate the net asset value per unit?
At least annually.
What is the requirement of an effective remuneration policy?
- They must be consistent with, and promote, sound and effective risk management.
- They must not encourage risk taking that is inconsistent with the risk profiles, rules or instruments of incorporation of the AIFs it manages.
- They must apply to those whose professional activities have a material impact on the risk profiles of the AIFM or the AIFs it manages.
How is the initial capital of an AIF determined?
By the type of fund:
• Common fund: 125.000 euros
• Self-managed investment company: 300.000 euros
• All other funds: 125.000 euros
When the fund’s manager invests in any other fund managed by the same manager, his remuneration will:
Neither increase nor decrease (there is no levy).
What are the AIFM requirements regarding liquidity management?
For each AIF it manages, the AIFM will employ an adequate liquidity management system and procedures to be able to monitor the liquidity risk of each AIF.
What characteristic must any additional obligation that CySEC imposes on the AIFM or AIF have?
These obligations may not be stricter than the EU rules and regulations.
What bodies need to be informed of any changes to the requirements of AIFs marketing retail investor in the Republic?
CySEC needs to report any changes to the EC and ESMA.
