Home / CY AIFM Law of 2013 / PART V – AIFMs MANAGING SPECIFIC TYPES OF AIF / CHAPTER 1 - AIFMs managing leveraged AIFs / Section 32 - Use of information by the Commission, supervisory cooperation and limits to leverage.
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Use of information by the Commission, supervisory cooperation and limits to leverage.
32.-(1) The Commission uses the information collected under section 31 for the purposes of identifying the extent to which the use of leverage contributes to the built-up of systemic risk in the financial system, risks of disorderly markets or risks to the long-term growth of the economy.
(2) The Commission, as the competent supervisory authority of every AIFM established in the Republic shall ensure that -
(a) all information gathered under section 31 in respect of all AIFMs under its supervision and the information gathered under section 7, is made available to the competent authorities of other relevant Member States, ESMA and the ESRB by means of the procedures set out in section 77; and
(b) any information regarding an AIFM under its responsibility or an AIF managed by that AIFM that this AIFM or AIF could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institutions in other Member States, shall be provided, without delay, to the competent authorities of other Member States directly concerned, by means of the procedures set out in section 77 and bilaterally, through cooperation agreements.
(3) The AIFM shall demonstrate that the leverage limits set by it for each AIF it manages are reasonable and that the AIF complies with those limits at all times. The Commission shall assess the risks that the use of leverage by an AIFM of the Republic with respect to the AIFs it manages could entail, and, where deemed necessary, in order to ensure the stability and integrity of the financial system, after having notified ESMA, the ESRB and the competent authorities of the relevant AIF, shall impose limits to the level of leverage that the AIFM is entitled to employ or other restrictions on the management of the AIF to limit the extent to which the use of leverages contributes to the build-up of systemic risk in the financial system or risks of disorderly markets. The Commission shall duly inform ESMA, the ESRB and the competent authorities of the Member State of the AIF, of actions taken in this respect through the procedures set out in section 77.
(4) The Commission shall make the notification referred to in subsection (3) not less than ten working days before the proposed measure is intended to take effect or to be renewed. The notification shall include details of the proposed measure, the reasons for the measure and when the measure is intended to take effect. In exceptional circumstances, the Commission may decide that the proposed measure takes effect within the period referred to in the first sentence.
(5) The Commission, before taking action to apply the measures referred to in subsection (3) of this section, shall take into account any relevant advice issued by ESMA in accordance with paragraph 6 and/or paragraph 7 of Article 25 of Directive 2011/65/EU. The Commission, may, however, take action, in spite of the fact that ESMA advises the contrary. In such a case, it shall inform ESMA, stating the reasons for its decision.
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