AIFMD II and the Irish advantage: a head start, not a finish line

In a recent fireside chat, AQMetrics sat down with Terrie Hughes, Risk Director at Bain Capital, and Elizabeth Daniel, Director of Compliance at Aspect Capital, to talk through what AIFMD II readiness actually looks like on the ground. One theme came through clearly for Irish managers: much of the groundwork is already laid. But a head start on the foundations is not the same as being ready.

The real shift: from paperwork to proof

The most important message from the panel wasn’t about any single obligation. It was about a change in what regulators expect you to be able to demonstrate.

Most funds already have documented liquidity management tools (LMTs) in their fund documents and references to them across their policies. That part isn’t new. What’s new is the evidence base: being able to show how those tools would actually operate in a real-life stress scenario.

As Terrie Hughes put it, AIFMD II is a genuine step change, and “the step change is going to be more on the evidence base… evidencing the operational elements of how those LMTs are going to operate in real-life scenarios.”

Elizabeth Daniel framed the same idea sharply: AIFMD II is more than a filing exercise. “It’s business as usual only if firms can prove, with data, governance records and a clear audit trail, that it is business as usual.”

That distinction is the lens for everything that follows.

Why Irish managers start ahead

For funds already operating inside the Irish regulatory framework, two existing bodies of work translate directly into an AIFMD II head start.

1. Loan origination, leverage and liquidity

Ireland has run a dedicated loan origination regime under the Central Bank of Ireland for years. For managers already inside it, the leverage dimension of AIFMD II holds few surprises. The leverage limits were “always those limits within the CBI regime”, as Terrie noted, “and there’s not that much of a difference in terms of AIFMD II.”

Where the genuine work lies is on the liquidity side. The market has moved steadily toward semi-liquid and evergreen structures, driven by real investor demand for access. The task under AIFMD II is making sure liquidity genuinely matches the fund: aligning redemption terms with the investor profile, the asset types and the fund’s actual liquidity. And that picture differs by structure: an evergreen fund open to retail investors carries different nuances from one serving purely professional investors.

For open-ended, loan-originated funds, evidencing sound liquidity management means ongoing monitoring and stress testing, quarterly or semi-annual, with risk reporting to the board kept current and responsive to market conditions, not static. Stress testing serves its purpose, but as Terrie observed, it’s often only when real-life scenarios hit that the gaps in a model reveal themselves.

2. Delegation and oversight

The second head start comes from a different piece of Irish groundwork: CP138, the Central Bank of Ireland’s Cross-Industry Guidance on Outsourcing, finalised in December 2021. The work Irish ManCos and AIFMs did to meet those outsourcing and operational-resilience expectations has, in Terrie’s words, “given us a really good foundation coming into AIFMD II”. Under the new regime, the delegation piece is “more an evolution of that, and bringing some other elements into scope”, not a rebuild from scratch.

The critical word is active. Meaningful oversight means reporting and monitoring aren’t “just passively received by the AIFM or the ManCo”: reports are genuinely reviewed, due diligence is genuinely done, and the AIFM remains the decision-maker. Delegation that quietly hollows out that accountability is exactly what regulators are now looking to rule out. Elizabeth’s summary: stronger governance, stronger accountability and very clear lines of where responsibility lies.

The catch: a foundation isn’t a finish line

Here’s where Irish managers should resist the temptation to relax. Starting ahead on the foundations doesn’t mean the readiness work is done, because the bar has moved to operational proof.

Terrie offered a useful way to think about it, in three layers: layer one is what you need to do (the documents and the specific requirements); layer two is how you think it will work; and layer three is how it actually works when a tool is pulled, and what the regulator, and any thematic review, makes of it. The firms that treat readiness as layer one only (“we’ve closed these gaps, we’re done”) are the ones most exposed. As Elizabeth cautioned, if the sum of your liquidity governance is a simple annual policy review, that’s precisely where a firm can get caught out.

Readiness, in other words, is continuous. It’s something to reassess and challenge frequently, not a project you close.

Where this lands: Annex IV and data readiness

The final rules for the expanded Annex IV dataset are still awaited, so no one can claim to have the exact requirements mapped. But the direction of travel is clear, and it isn’t waiting for the guidance.

Both panellists pointed to the same priority: data quality and traceability. Whatever the final questions look like, the expectation is more granularity. And the real lift is being able to source the relevant information reliably, trace it back to a single, trusted source used consistently across the firm, and stand over its accuracy. Add to that the national nuances that already exist under Annex IV – a standard template for one regulator, an additional field for another – and the case for getting data foundations right now becomes hard to argue with.

This is the crux of the “silent deadline.” Mandatory reporting may not arrive until 2027, but the data you’ll rely on for that first submission is data you should be capturing today. Gaps in the record can’t be reconstructed after the fact.