Bringing you live news and features since 2006 

Aima slates “flawed” EU directive on alternative asset managers

RELATED TOPICS​

The Alternative Investment Management Association has condemned as ‘flawed’ the European Commission’s proposals for regulating alternative investment fund managers, which are due to be

The Alternative Investment Management Association has condemned as ‘flawed’ the European Commission’s proposals for regulating alternative investment fund managers, which are due to be published in the form of a draft directive on 29 April.

The Alternative Investment Fund Managers Directive is expected to propose regulation of managers of hedge funds, private equity and real estate funds with EUR250m or more in assets under management. The legislation is unlikely to come into effect before 2012.

The draft has also been attacked by Paul Nyrup Rasmussen, the Socialist Party leader in the European Parliament and an outspoken critic of hedge funds, who argues that the threshold is much too high.

According to a Commission memorandum, the limit has been calibrated in order to focus supervision on ‘the areas where the risks are concentrated’, as well as to exempt start-up funds and venture capital.

It has been estimated that the directive would affect around 15 per cent of EU hedge fund managers accounting for around 76 per cent of all EU-domiciled hedge fund assets, although a very large proportion of alternative funds are domiciled in offshore jurisdictions outside the EU.

The Commission estimates the total assets of non-Ucits funds amount to around EUR2trn and the directive would also cover more than a third of managers of other types of non-retail fund.

Although the directive meets Aima’s insistence that regulation should target managers rather than their funds, the association is not happy with the result. ‘We are very concerned about the manner in which the European Commission’s directive on the industry has been drafted,’ says executive director Florence Lombard (pictured).

‘It does not appear that the drafting of the Alternative Investment Fund Managers Directive has been coordinated with the relevant international institutions. The G20 mandated the Financial Stability Board and the International Organisation of Securities Commissions to look at these issues, and it is not clear how this directive will fit in with the new international architecture established by the G20.

The drafting of the directive has been rushed through in a very tight timeframe without anything like the usual standards of consultation that we expect from the Commission. There certainly has been very little consultation with our industry, and we are worried that measures could be proposed which are inappropriate for a complex and diverse industry such as ours.’

Even though the draft directive does not appear to satisfy the industry’s critics either, Aima is concerned that that the drafting process has been subjected to undue political pressure.

‘There has been much rhetoric from various political organisations on the directive, most of which appears designed to satisfy domestic audiences ahead of the forthcoming European elections rather than to secure an effective and sensible solution to identified problems,’ Lombard says.

‘The volume of political rhetoric has been particularly baffling given that all the major reports into the current crisis, including the de Larosière report and the Turner Review, concluded that hedge funds played an absolutely peripheral role.

‘All of this is important because a flawed directive could have major negative consequences for several key European financial industries and directly affect tens of thousands of jobs in Europe.’

Latest News

BlackRock’s global ETP flows report for June finds a steady rise with USD128.1 billion added to global ETPs in June,..
Morningstar’s global ETF flows report for the first half of 2024 shows that actively managed ETFs have captured 25 per..
The surge in bitcoin ETF launches and funds flowing into the sector is transforming institutional investment in digital assets but..
LSEG Lipper’s latest research finds that the majority of actively managed funds and ETFs globally were not able to beat..

Related Articles

Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Andrea Busi, Directa SIM
Romain Thomas talks to Andrea Busi (pictured), CEO of Directa SIM, who explains why the online trading platform has just...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by