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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) – 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.”
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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”.
EurActiv.com – European Commission proposals to regulate alternative investment funds discriminate against private equity and favour direct competitors like sovereign wealth funds or maverick businessmen, Javier Echarri, secretary-general of the European Private Equity and Venture Capital Association (EVCA), told EurActiv in an interview.
"We are not against regulation, but it has to be fair," Echarri said, complaining that an EU draft directive on alternative investment funds will hit private equity firms in a disproportionate manner in comparison with other financial actors, further damaging the credit market "when most European companies are in desperate need for capital".
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.
Guardian Unlimited – Aspects of a planned European Commission directive to regulate hedge funds do not go far enough and must change to protect investors, French Economy Minister Christine Lagarde said in remarks published on Monday.
The commission is due to publish its draft directive on governing hedge funds on Wednesday, against a backdrop of growing political pressure for increased regulation of institutions seen as posing systemic risks.
"The good side of the directive being prepared by the commission is that it establishes (a) surveillance (system) on hedge funds," Lagarde told French daily Le Figaro.
Stuff – The drafting of the European Commission’s directive on hedge funds was a rush job without proper consultation and looks to have been subject to "undue political pressure," an industry body said.
The Alternative Investment Management Association said it was concerned about the way the Alternative Investment Fund Managers directive, covering hedge funds, was drafted. The publication of the draft directive has been postponed from this week to Wednesday, April 29.
