The AIFMD Feeding Frenzy

It is interesting when you see a market's supply and demand mechanisms at work. The case in point is the almost obscene scramble for AIFMD resources that is evident in London.

In the post financial crisis analysis unregulated risk taking by hedge funds was seen as one of the primary causes. The Alternative Investment Fund Management Directive (AIFMD) is Europe's attempt to address this. In doing so its net is catching every fund that is not already subject to UCITS rules and regulations.

While the political processes have moved forward and created immovable dates, these same processes have held up the crafting of detailed rules. AIFMD must transpose into local law on the 23 July 2013, yet the detailed rules (aka Level 2) were only published just before Christmas 2012. Even then the rules are not complete and their interpretation is taxing some very smart minds. Some key aspects are still unclear and subject to ongoing consultation; consultations that will not complete until March or April, very close to the transposition date!

There is the opportunity for existing firms to claim transitional relief giving them another 12 months to comply. The issue is that the exercising of this option to grant transitional period falls to individual regulators/jurisdictions and the full implications are not known.

From this you may see that it is hard for anyone to claim to have (much?) experience in AIFMD. There are many who can read and offer opinions on the rules, but there are some aspects that no-one knows definitively, at least not yet.

Since the beginning of the year and after the publication of Level 2, the large number of UK based-fund managers affected by AIFMD have started to realise that this is real and that they need to do something - even if they don't know what they need to do. Personally I have been fielding around ten calls a week from recruiters asking me if I am interested or know people who are? I am under contract until early July so not looking for work, but I have passed on the names of friends and contacts that I think could do this. I have now run out of those too.

It seems that if you know what AIFMD stands for and can spell "regulation" you are in demand; I simplify slightly but you get the idea. This was brought home earlier to day by a fellow contractor who had previously told me that he was approached for an AIFMD Business Analysis role that was paying £600pd - a good rate for a BA. Today the same recruiter has come back to him and said that the rate has now been lifted to £750pd - a clear indication of the shortage of supply in the market and of economics in action.

In a similar vein I have seen the rates for Project and Programme management in this area rise by up to 50% over the sort of rates paid last year. After a long period of rate squeezing in the contract market this is both encouraging and alarming with the prospect that some buyers will end up paying premiums for poorer resources.

Everyone is looking for experience in AIFMD, yet what little there is has been consumed already. What is left is for more creative recruiting that looks for resources with related experience and having the capability to make a contribution in AIFMD. Alternatively a flight of last resort(?) to the premium consultancy market on the basis that they could not have done any better.

I suspect the next few weeks will be even more interesting.