Thu, Jul 24, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

AIMA responds to new European Commission proposals on short selling and OTC derivatives

Wednesday, September 15, 2010
Opalesque Industry Updarte – The Alternative Investment Management Association (AIMA) – the global hedge fund industry association – says the proposals on short selling and over-the-counter (OTC) derivatives published today by the European Commission could help remove uncertainty and confusion in the market.

However, AIMA said the proposals contained a number of flaws that it hoped would be addressed. The short-selling proposals, which apply to credit default swaps (CDS) as well as to publicly traded securities, will create harmonised, pan-European rules on short selling, while the OTC derivatives reforms will mandate central clearing of eligible contracts.

AIMA CEO Andrew Baker said: “In the interests of international regulatory consistency it is desirable that the Commission is harmonising rules in both these fields. One of the major problems that the industry has faced in respect of short-selling regulation was that some EU jurisdictions acted unilaterally and arbitrarily in imposing and then lifting bans. A common regime that concentrates on reporting rather than bans is the way forward.

“We are also glad that the Commission has acknowledged that short selling enhances market liquidity and aids price discovery. We do hope however that new powers to ban short selling are never used. Such bans have never worked, and indeed all the evidence is that the shorting bans during the crisis made the situation even worse. And while we support increased transparency in the field of short-selling, we think short position reporting by individual firms should be only to the regulator. The market should receive aggregate position reporting only.”

AIMA also welcomed the fact that sovereign CDS will continue to be permitted under the new regulations. “Sovereign CDS have entirely legitimate hedging uses,” said Mr Baker.

Many aspects of the draft regulations on OTC derivatives are to be supported, AIMA said. “There is a strong financial stability argument for increased transparency in derivatives settlement, so we do support mandatory central clearing, even though it would mean increased costs for the industry,” said Mr Baker.

“Harmonising requirements for the establishment and operation of central counterparties (CCPs) and trade repositories would also appear sensible,” said Mr Baker. “But we are concerned about the implications for E.U. hedge fund managers that use non-E.U. CCPs. The regulation expects ‘third country’ CCPs to meet stringent conditions in order to be able to serve E.U. managers. This measure is potentially protectionist and we would urge European lawmakers to rethink it,” said Mr Baker.


(press release)

As the only truly representative global hedge fund association, AIMA , the Alternative Investment Management Association, has nearly 1,200 corporate members (with over 4,800 individual contacts) worldwide, based in over 40 countries. Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms, investors, fund administrators and independent fund directors. 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. www.aima.org.


Bg

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. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  3. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  4. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  5. Hedge fund manager Winton Capital making headway with long-only strategy[more]

    From PIonline.com: North American investors are helping Winton Capital Management Ltd. make progress — albeit slowly — toward its founder's goal of becoming a $100 billion company. The firm's ticket to quadrupling its assets under management is unlikely to be one of its scientifically designed manag