Sat, Aug 30, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

AIMA to respond to U.K. FSA on remuneration paper

Tuesday, September 14, 2010
Opalesque Industry Update - The Alternative Investment Management Association (AIMA) – the global hedge fund industry association – is to respond to the UK’s Financial Services Authority’s consultation on remuneration.

The FSA published its Consultation Paper, “Revising the Remuneration Code”, following changes to the European Union’s Capital Requirements Directive (CRDIII). The paper proposes changes to the FSA’s existing Remuneration Code, which was introduced on January 1st 2010 and currently applies to 27 of the largest banks, building societies and broker dealer firms. Following the amendments proposed, it could cover approximately 2,500 firms, including those defined as MiFID investment firms, such as hedge funds.

The remuneration provisions of CRD III include a ‘proportionality’ clause stating that it should be applied to firms in a way which is ‘proportionate to their size, internal organisation and the nature, the scope and the complexity of their activities’, and the FSA has said it will seek to abide by this in its proposals. The consultation period closes on 8th October.

Andrew Baker, CEO of AIMA, said: “We will be meeting representatives of the FSA remuneration team this month, ahead of our submission, to discuss our detailed concerns with them directly and to suggest the need for an appropriate and proportionate regime to be implemented.

“The original justification by global leaders for action on remuneration was that a ‘bonus culture’ at large, systemically-important financial institutions had incentivised reckless and short-termist behaviour, increasing systemic risk, and creating financial instability. It was therefore agreed to tackle remuneration at a global level because it was a financial stability issue.

“Given that the FSA itself does not believe any individual hedge funds are large enough to pose a systemic risk to financial stability and given that hedge funds - unlike many large financial institutions - have not sought or received any public bail-outs, we would hope that if these provisions were to be applied to hedge fund managers it would be on a proportionate basis. Remuneration in the hedge fund sector does not encourage the reckless and short-termist behaviour the ‘bonus culture’ has created elsewhere – quite the opposite. Performance fees help to align the interests of manager and investor. And they do not reward failure, which was another criticism of the ‘bonus culture’ at large financial institutions.” Corporate website: http://www.aima.org

(press release)

- FG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Study shows what resonates with investors: 'Unwavering', 'passionate' beats 'committed', 'dedicated' and more surprises[more]

    Komfie Manalo, Opalesque Asia: A new study by Pershing Square, a unit of BNY Mellon company, showed that an effective value proposition strengthens audience connections and fosters growth, yet many advisors have had little objective guidance in formulating such statements until now. In the

  2. Comment – Why you should avoid the hottest hedge fund hands, Swedroe attacks Hussman over risk management, relative value strategy[more]

    Why you should avoid the hottest hedge fund hands FromCNBC/Yahoo.com: Investors who don't have money with Pershing Square Capital Management are likely salivating at the hedge fund's industry-leading 26 percent return from January through July. But investing with Bill Ackman and other to

  3. Hedge fund assets decline in July - eVestment[more]

    Bailey McCann, Opalesque New York: Total assets in hedge funds declined in July and dropped 0.49%, marking the industry's second monthly asset decline in 2014, according to the latest asset flows data from eVestment. Despite the asset decline, total industry AUM remained above the $3 trillion

  4. AIMA makes 'the case for hedge funds'[more]

    Bailey McCann, Opalesque New York: The Alternative Investment Management Association (AIMA), the global hedge fund industry body,

  5. Managed futures' global diversification is important in next phase of economic recovery[more]

    Komfie Manalo, Opalesque Asia: The global diversification provided by managed futures may prove to be extremely valuable as the markets enter the next phase of the economic recovery, said Campbell & Company, a pioneer in absolute return invest