UK Treasury, FCA Propose Overhaul of Alternative Investment Fund Regulation

The UK Treasury and Financial Conduct Authority have initiated a review to reform the UK's regulatory regime for Alternative Investment Fund Managers (AIFMs), proposing a new three-tier system based on fund size to reduce regulatory burdens and foster growth, marking a significant divergence from the EU's updated AIFMD II framework. This divergence introduces potential compliance complexities for firms operating across both jurisdictions, especially regarding delegation between UK and EU AIFMs. Concurrently, the asset management landscape in Europe is evolving, with private markets expanding access to retail investors and both public and private asset managers facing distinct market pressures and opportunities. Leading UK asset manager Legal & General (AMLG) exemplifies the sector's adaptation by offering diverse investment products with a focus on sustainable investing and innovation. In the US, regulatory developments include the SEC providing new guidance to broker-dealers on custody and net capital treatment of cryptoassets, signaling a more practical approach to digital asset regulation. Together, these developments highlight a dynamic regulatory and market environment influencing asset management practices and cross-border operations.