AIFMD: The Alternative Investment Fund Managers Directive (AIFMD) is an EU investor-protection measure governing the management and distribution of Alternative Investment Funds (AIFs) within the EU by 'Alternative Investment Fund Managers' (AIFMs). The primary focus of the Directive is to regulate the fund manager, as opposed to regulating funds, and to impose obligations on their depositaries, administrators and external valuers. One key imposition is to increase asset safety throughout the custody holding chain, through defining the role of a depositary which is liable for the immediate restitution of any lost assets. Service providers such as custodians have typically been exposed only to liability for their fraud, negligence or wilful default - and, in the event of a loss of assets or other failing, a client has to prove the fault of the provider. Under AIFMD, the depositary will be liable to restore any client asset in the event of the asset being lost. There may be an exception to the liability for loss if it was outside the control of the depositary or custodian bank.

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AIFMD in our glossary: terms and definitions

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