Wed, Jul 1, 2015
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. Opalesque Exclusive: New systematic strategy managed alongside research firm outperforms S&P500[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging CTA manager explains how he runs his strategy, which is based on an index produced by a research firm. Peter Turk is head of

  2. Larry Robbins' hedge fund Glenview buys 1m Tenet Healthcare shares[more]

    Komfie Manalo, Opalesque Asia: Glenview Capital Management said it bought an additional 979,482 shares at Tenet Healthcare Corp valued at $53.80 million, raising its stakes in the healthcare services company to 15.16%, reported

  3. Hedge funds panic over Greece[more]

    Komfie Manalo, Opalesque Asia: Some investors are in panic mode as Greek Prime Minister Alexis Tsipras announced Sunday night that the banks and the stock market would be closed Monday, said

  4. Alternative investment industry could grow to $13.6tln in five years[more]

    Komfie Manalo, Opalesque Asia: Leading auditing and advisory group PwC said that the global alternative investment industry, which includes hedge funds, private equity and real assets, is set to increase to $13.6tln within the next five years. "Be

  5. Qbasis gets $200m-plus investment in 'black swan' hedge fund[more]

    From Reuters.com: A hedge fund that more than doubled clients' money during the 2008 financial crisis has attracted more than $200 million from an investor aiming to cash in on fresh ructions in global markets. Qbasis Invest has secured the investment from Britain's Omada Capital, Florian Wagner, wh

 

banner