Tue, Sep 23, 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. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Institutions - North Carolina workers call on state pension to dump up to $6bn in hedge funds, UK pension fund criticizes hedge fund fees[more]

    North Carolina workers call on state pension to dump up to $6bn in hedge funds From Forbes.com: The State Employees Association of North Carolina this afternoon called on state Treasurer Janet Cowell to withdraw all investments in hedge funds, which appear to amount to approximately $6 b

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali