Sat, Apr 19, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Laven Partners: update on EU's AIFM Directive

Thursday, February 18, 2010
Opalesque industry Update - Since taking over the EU Presidency in January, the Spanish have put forward a new version of the Directive.

This compromise proposal includes substantial improvements in relation to private placement rules, leverage and fund managers’ delegation capabilities. However, in contrast to the Swedish draft, the provisions relating to the marketing of third-country funds have taken a step back. In the previous version, a non-EU fund manager was permitted to market its funds under a national private placing framework with the approval of the relevant EU member state. The Spanish version however, is proposing an additional level of regulation whereby a non-EU fund could be marketed by a non-EU manager to investors in the EU only if the non-EU manager reports to the relevant local regulator.

In addition, the Spanish have made a further amendment to the Directive this week which, according to Financial News, "would require 'appropriate cooperation agreements' between individual state regulators within the EU and regulators of other countries before hedge and private equity funds from those countries could market their wares in a European country".

Industry professionals and politicians have been rallying over the Directive since last summer and unsurprisingly, the number of proposed amendments put forward by different bodies is unprecedented. According to Javier Echarri, secretary general of European Venture Capital Association, well over a thousand amendments have been submitted by MEPs. On 27 January, the JURI Committee (the EU Committee on Legal Affairs), which is advising the European Parliamentary Committee on Economic and Monetary Affairs, held a meeting to discuss the potential impact of the Directive. The JURI Committee presented 29 amendments; most notably a proposal which recommends changing the name of the Directive itself to include funds.

Scottish investment managers, represented by the Scottish Financial Enterprise (SFE), also joined in expressing their concerns over the introduction of new layer of regulation. “It is not better regulation - just more, overlapping regulation that would bring restrictions without benefits," said Owen Kelly, Chief Executive of SFE.

The UK Business Secretary, Lord Mandelson, has also been among the critics of the agenda, branding it “badly flawed”. He said: “Parts of the alternative investment fund managers’ directive read more like a long standing grudge against the hedge fund industry than a serious attempt to address systemic risk.” The same argument was proffered by the Bank of England’s Financial Markets Law Committee, which warned of systematic failure and widespread disruption were the Directive implemented in the current format.

Last month, the Internal Market and Services Commissioner, Michel Barnier, wrote to Sayed Kamall, a London MEP, expressing his desire to come to London to consult the hedge fund industry. We have been in touch with Mr. Kamall who has informed us that he is currently in discussions with M. Barnier's office with regards to the date and time of the meeting with hedge fund and private equity managers. We hope this meeting will take place as it is obvious that the Directive has been drafted by politicians remote from the industry and unfamiliar with its practices. Mr. Barnier appears more interested in engaging than his predecessor Charlie McCreevy, despite his agenda having already been influenced by the past meetings of the G20, Basel Committee on Banking Supervision and internal EC discussions.

Meanwhile, European hedge fund managers are preparing for changes by structuring their strategies as UCITs in response to investor demand for more regulated vehicles. Likewise, professional investors welcome the new proposals, which will allow them to invest in UCITs structured investment strategies that would have previously been available through alternative funds only.

The alternative funds industry is eager to find out what the future holds for them especially in light of a changed political environment in Brussels since the beginning of the crisis. As European Voice, an EU affairs newspaper described: “The need for reform is just as great, but the sense of urgency has diminished”.


This article was part of the Laven Partners Monitoring Update on the European Commission Directive on Alternative Investment Fund Managers.

Laven Partners is the consultancy arm of the Laven group - an investment management group specialised in providing regulatory, operational and legal solutions to the fund management industry for both fund managers and institutional investors.www.lavenpartners.com


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Banner
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: Classic Auto Funds Limited (CAF) launches several car investing funds[more]

    Bailey McCann, Opalesque New York: A new trend in alternative alternatives is emerging - car appreciation funds. Classic Auto Funds Limited (CAF) is the first to market with several funds that make super elite luxury cars into real asset investments. As a result of growing overseas demand couple

  2. Investing – Big hedge funds bought Puerto Rico's junk bonds, Fidelity explores new trading venue amid flash trade concerns, Crisis-era Greek bonds reward early buyers with big effective returns, Cargill unit discloses stake in Freddie preferred[more]

    Big hedge funds bought Puerto Rico's junk bonds From Reuters.com: Several large hedge funds doubled down on Puerto Rico in last month's giant bond sale despite the U.S. territory's financial struggles, the Wall Street Journal reported, citing confidential documents reviewed by the newspa

  3. Opalesque Exclusive: Hedge fund replicators evolve[more]

    Bailey McCann, Opalesque New York: Hedge fund replicators as a group of products tend to get a bad rap from hedge fund managers who suggest that the best a replicator can offer is dynamic beta capture. A

  4. Opalesque Exclusive: Pensions, endowments, family offices reconsider life settlement investments[more]

    Bailey McCann, Opalesque New York: Hedge funds were once the largest investors in the life settlement industry, now the industry is seeing more interest from pensions, endowments and family offices directly. Life settlements have always been considered a niche part of the investing landscape, an

  5. SEC allows investment funds to use social media[more]

    Bailey McCann, Opalesque New York: The Securities and Exchange Commission (SEC) has released new guidance letting investment funds and advisors use social media to promote client reviews. The guidance seeks to assist investment managers in developing compliance policies and procedures reasonably