HedgeCo.net (West Palm Beach) – The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has warned that the European Commission’s draft directive on Alternative Investment Fund Managers would hit fund managers and investors around the world if enacted into European law.

The hedge fund assiciation argues that the directive creates potentially major difficulties for non-EU funds and/or non-EU managers in accessing the EU market. Marketing of funds by managers will only be allowed with a special marketing passport that the directive creates. However the directive also delays its introduction by three years and imposes significant obstacles (such as demonstrating regulatory and tax equivalence) to obtaining it.

AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent. This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU. Investors will face loss of choice, increased costs and diminished returns.

Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter.

This will also have a very significant impact on investors. EU investors, in particular, face a situation where they can use only EU asset managers of EU domiciled funds investing assets under an EU custodian. And international investors with EU funds or managers will find that their costs will go up and their returns will go down because of the restrictions and compliance costs the directive imposes.

We believe that the provisions of the draft directive with protectionist consequences will not only hit the industry worldwide but weaken the competitiveness of the EU in investment management and make the EU a less attractive destination for international investment. Naturally, we hope that it can be revised to avoid this.”

Editing by Alex Akesson
alex@hedgeco.net

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Bloomberg – Buyout firms and hedge funds, “Read my lips: You’re going to have regulation.”

So says Poul Nyrup Rasmussen, the Socialist Party president who conducted a two-year campaign for the first European Union regulations governing so-called alternative investors. Hedge funds and private-equity firms, which manage 2 trillion euros ($2.8 trillion) in the region, are in line for some of the world’s strictest rules, and potentially billions of dollars of compliance costs, under an EU measure proposed in April.

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Tags: billions of dollars, compliance costs, european-union, investors, lips, party president, private equity firms, socialist party, trillion

Times Online – The role of the City of London as one of the world’s preeminent financial centres came under attack for the second time in two weeks yesterday, this time from proposed EU rules for private equity and hedge funds.

The EU wants private equity firms with more than €500 million under management and hedge funds with more than €100 million of funds to file detailed financial information with the Financial Services Authority. Private equity firms will also need to file figures relating to debt, risk and cash.

If the European Parliament approves the proposed legislation, about 1,000 British companies – owned by private equity firms either headquartered or with an office in the EU and with more than €500 million under management – would be saddled with annual compliance costs estimated at about £30,000.

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Tags: 100-million, city-of-london, compliance costs, debt risk, european parliament, financial centres, financial information, financial-services-authority, parliament, preeminent, private equity firms, proposed-legislation, second-time