Fri, Apr 20, 2018
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. Investing - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its