AMF regulation changes: Asset Management Redemption Gates consultation

AMF regulation changes include the possibility of providing redemption gates for a number of asset management firms. French regulator holds the consultation till the 30th of December regarding this matter. 

2 December, AtoZForex The Autorité des marchés financiers (AMF) has published a press release, stating that it holds consultations on the conditions for executing redemption gates on open-end funds.

AMF regulation changes

The provision of the ‘Sapin II’ has prolonged the possibility of providing redemption gates. Currently, funds of alternative funds may use them, according to AMF. Moreover, this possibility is also available for professional investment funds and real-estate collective undertakings.

Moreover, French watchdog will outline the cases and conditions under which asset management companies can use these gates. Specifically for this, AMF is commencing a public consultation. Users can get information about the proposals for changes to AMF general regulation and its policy. AMF will hold the consultations till 30th of December, 2016.

The ‘Sapin II’ bill and the AMF General Regulation, UCITS implementation may allow the introduction of the temporary redemption gates to certain funds. These include professional investment funds, private equity funds, professional private equity funds and employee investment undertakings. Moreover, French regulator is consulting on the conditions under which asset management could utilize these gates. The official AMF press release states that the General Regulation:

  • specifies the situations that will enable the gates to be activated;
  • imposes the principle of capping redemption requests in the same proportions for all unit holders;
  • prohibits any right of priority granted to a unit holder whose order will have been gated and then presented again at the subsequent net asset valuations;
  • requires asset management companies that decide to activate the gate to inform the AMF and the unit holders;
  • defines criteria to take into account when defining the threshold for triggering the gate;
  • requires asset management companies to determine a priori a maximum duration for using the gate.

New AMF framework

Additionally, AMF plans to provide consultations on the content of a new instruction on the practicalities of executing these redemption gates. The new framework will not apply to caps, used by funds of alternative funds, professional investment funds, and professional specialized investment funds.

Also, French watchdog suggests extending its policy on the conditions for applying gates in real estate collective investment undertakings proposed to nonprofessional investors. The regulator wants to do this by imposing a minimum redemption threshold.

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