Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
HedgeCo.net (West Palm Beach) – The Alternative Investment Management Association, (AIMA) has launched a Directive Centre on their website as part of an on-going campaign to have the European Commission’s draft directive on Alternative Investment Fund Managers revised.
It is intended as a resource for journalists and members of the public and contains everything relevant for our campaign, including press releases, guidance notes, FAQs and other resource materials issued by AIMA; speeches and articles on the directive and links to relevant documents, including the European Commission’s directive and details of its legislative process; and a quotations section featuring a host of different figures expressing their concern about the directive.
Those quoted expressing concern or reported as doing so include pension funds and pension fund industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity, Swedish and UK ministers, Irish officials, the chair of the European Parliament’s ECON committee, the US Treasury, the UK Conservative party, the Mayor of London, the German Funds association, the Financial Times and the Economist, and even Robert Peston, Jacques de Larosiere and Charles McCreevy.
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HedgeCo.net (West Palm Beach) – Paul Myners, the UK Financial Services Secretary to the Treasury, speaking at an Alternative Investment Management Association (AIMA) event this morning in London, said, “the UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say.”
Lord Myners said the UK government’s aim was “a framework which allows efficient, well run and well regulated fund managers to compete for business without restriction across the EU and to make the EU a base from which to compete in global markets.” But he said that the draft directive, “needs major surgery before this can be delivered”.
He also expressed concern about the protectionist impact of the directive and argued that, “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”. He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. And on the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.
Lord Myners said that the UK government was, “reaching out bilaterally to leverage natural alliances and win over others” in Europe. But he pointed out that managers threatening to quit the UK “will make my job harder” and would not be well received in Europe. And he called on institutional investors to make their voices heard on the directive. He said, “if institutional investors can make clear which regulatory safeguards they want to see applied to their fund managers and which they find to be costly and unnecessary, this will send a powerful message to policymakers”.
The UK Financial Services Secretary to the Treasury concluded by arguing that, “an open single market in fund management must be a major opportunity for Europe and we must all do our bit to ensure we deliver the best possible result for EU investors and for the future of the EU funds industry”.
West Palm Beach (HedgeCo.net) – Global hedge fund industry group, The Alternative Investment Management Association (AIMA), has welcomed the principles for hedge fund regulation published by the International Organization of Securities Commissions (IOSCO) today.
“We are very happy to welcome the publication of this report today because AIMA has already announced its support for several of the high level principles mentioned in it." Andrew Baker, AIMA CEO, said, “In our new policy platform of 24th February, we said that we supported global registration for managers and we are glad that IOSCO has also come out in favour of this.
“We also expressed our support for the reporting of systemically relevant information by managers of large hedge funds to their national regulators, and this is another one of IOSCO’s key principles.
“We are also delighted that IOSCO refers to the ‘development, implementation and convergence of industry good practices’ because AIMA has been extremely active in this area and is continuing a great deal of work on it with the other groups involved. We are following up on a G20 action point in this respect," he continued.
In a note of caution, however, Baker said, "We would stress that it is hedge fund managers, rather than the funds themselves, that should registered. It is also mentioned that hedge funds use derivatives for speculative purposes without stating that exchange-traded and over-the-counter derivatives are principally used by the relevant market participants for risk management purposes."
“Finally, we are concerned that these recommendations may lead regulators to seek quantity rather than quality of data. It is important that regulators have the expertise and resources to deal with the data they receive.”
AIMA has more than 1,100 corporate members worldwide, based in 40 countries, including hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators.
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West Palm Beach (HedgeCo.net) – The Alternative Investment Management Association (AIMA), announced plans to mobilise the world’s hedge fund industry on the European Commission’s draft directive for Alternative Investment Fund Managers.
“There are provisions in this directive with potentially serious consequences for managers, investors, service providers and advisers internationally." Andrew Baker, AIMA CEO, said, "As the global trade body for the industry it is right therefore that AIMA takes the lead in mobilising resources in order to secure the best possible outcome for the industry on the directive."
"The feedback we’re getting from our members, who manage more than 75% of hedge fund industry assets globally, is that the draft directive has created enormous confusion. Because of the lack of proper consultation the directive presumes a structure for the industry which bears little relationship to reality. Implementation in its current form could prove to be unworkable. It also appears to be in conflict with much of existing EC financial services legislation." Baker said.
"We will therefore call for urgent effort to be devoted to re-drafting this directive." Baker continued, "To achieve this, AIMA will be announcing a series of initiatives to mobilise the industry. We will not oppose everything in the directive; some of the provisions, such as manager authorisation and registration, are already supported by us and measures which increase transparency to assist the authorities in the understanding of systemic risk issues are to be welcomed."
"We want to work with the Commission, EU governments and the European Parliament on this. We are not opposed to the directive per se, we just want the final directive to be practical and realistic.” Baker concluded.
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EurActiv.com – The European Commission’s draft directive on hedge fund regulation is potentially ambiguous and needs to be rewritten, an industry body said on Friday (22 May).
"The particular problem with the draft directive [...] is that it is written in such an unclear way that it is open to ambiguous interpretation," said the Alternative Investment Management Association (AIMA).
"Implementation in its current form could prove to be unworkable. It also appears to be in conflict with existing financial services directives," said AIMA, which represents more than 1,200 hedge fund firms worldwide.
Hong Kong Standard – Hong Kong remains the largest hedge fund center in Asia, with managers in the city overseeing US$22 billion (HK$171.6 billion) in assets as of December 2008, the Alternative Investment Management Association Hong Kong said.
The city had 245 hedge fund managers by December, versus 150 in Singapore and 145 in Australia. There were 30 hedge fund startups in Hong Kong in 2008, raising the most assets for Asian hedge fund managers with US$1.6 billion, the London-based AIMA said yesterday, citng AsiaHedge data. Singapore came second with US$638
Reuters – The drafting of the European Commission’s directive on the hedge fund industry has been "rushed through" without adequate consultation, industry body the Alternative Investment Management Association (AIMA) said.
"We are also concerned that the process of drafting the directive has been subjected to undue political pressure," AIMA’s executive director Florence Lombard said in a statement published on Thursday.
West Palm Beach (HedgeCo.net) – Todd Groome, Chairman of the Alternative Investment Management Association (AIMA) said in a statement regarding the Public-Private Investment Program announced by Tim Geithner, "It shows that there is recognition among policy makers at the highest level that the hedge fund industry is part of the solution."
The Treasury’s Public−Private Investment Program aims to unclog credit markets and promote credit extensions, according to the Northern Trust Economic Research Department. The program has chalked out two initiatives – Legacy Loans Program and Legacy Securities Program. The Legacy Loans Program combines FDIC guarantee with debt financing from the private sector and Treasury to purchase troubled loans from financial institutions.
"Hedge funds can and should play a crucial role in assisting the recovery by providing counter-cyclical risk capital at times of distress like this," Groome said.
"AIMA, as the global trade body for the world’s hedge fund industry, is committed to working with policy makers internationally to help solve the current market crisis and prevent future crises from taking place," he concluded.
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West Palm Beach (HedgeCo.net) – “We welcome the publication of the Turner Review, which is an impressive and comprehensive piece of work." Andrew Baker, Chief Executive of The Alternative Investment Management Association (AIMA), said, "It is about the banking system’s role in the current financial crisis and as such its principal focus is the banks, not the hedge fund industry. We are grateful to Lord Turner for his even-handed and measured approach and for not making hedge funds the scapegoat for this crisis."
"The Review says that regulators and central banks need to gather better macro-prudential information on hedge fund activities and we completely support this – in fact we called, in our new policy platform of the 24th February, for the disclosure of systemically significant information by hedge fund managers to their national regulators (not all assets are managed in a collective fund structure). We also called for a global manager authorisation and supervision template on the FSA model. AIMA took the lead on behalf of the hedge fund industry globally in these respects.
We are glad that the Review points out that hedge fund leverage “is typically well below that of banks – about two to three on average” compared with levels of up to 50 times with some of the banks; and that “hedge funds in general are not today bank-like in their activities”.
Given those qualifications, we do appreciate why in the interests of financial stability the Review says that regulators need the power to apply appropriate prudential regulation to hedge funds if they judge that their activities have become bank-like in importance.
We note that any such regulation is hypothetical at present (the Review talks of “if it ever did become appropriate” to do this) and we are glad that Lord Turner has stressed that any regulation in this respect should focus on economic substance not legal form.”
AIMA has more than 1,200 corporate members worldwide, based in 43 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.
Hedge Funds Review – A majority of all assets under management (AUM) by hedge funds and funds of hedge funds globally are from institutional investors, according to the Alternative Investment Management Association (AIMA).
One third of the AUM comes from institutional investors now come from pension funds.
The AIMA research defines institutional investors as pension funds, university endowments, foundations and governmental authorities. The figures were produced by AIMA’s research department and are based on extensive consultation with the association’s members.
MSN UK News – A hedge fund body has thrown its weight behind regular disclosure of large holdings and risks to regulators, as calls grow for greater scrutiny of the industry.
The Alternative Investment Management Association (AIMA), said on Tuesday it supported regulators being able to get information from large hedge funds to build up a regular picture of systemically significant holdings and risk exposure.
The move by AIMA, which represents more than 75 percent of hedge fund assets worldwide, comes with the industry under pressure for greater regulation and the Hedge Fund Standards Board (HFSB) facing criticism for the low number of funds signed up to its voluntary standards on governance and disclosure.
Seeking Alpha – The debate over short selling often pits traditional “long-only” managers against the upstart alternatives: hedge funds. But as this report in yesterday’s FT points out, the lines between “traditional” and “alternative” are blurring quickly. The Alternative Investment Management Association (AIMA) has been an ardent defender of the hedge fund industry against what it sees as unfair criticisms in the media (see relatedposts).
But now associations of “traditional” investment managers have come to the defense of short-selling. In fact, according to the FT, the Investment Company Institute (ICI) in the US, the Investment Management Association of the UK (IMA), and Australia’s Investment and Financial Services Association (IFSA) have each warned regulators against requiring short-sellers to publicly reveal their short positions.
