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Aima steps up criticism of “ill-considered” EU directive on alternative managers


Hedge fund industry trade body the Alternative Investment Management Association has renewed its attack on the European Union’s proposed Alternative Investment Fund Managers Directive foll

Hedge fund industry trade body the Alternative Investment Management Association has renewed its attack on the European Union’s proposed Alternative Investment Fund Managers Directive following the publication of the draft law today by the European Commission.

The organisation says the legislation is not an appropriate response to the causes of the current financial  crisis, and that it runs counter to global efforts being undertaken to reform the international financial regulatory structure.

‘This directive is not a proportionate regulatory response to any of the identified causes of the current crisis,’ says Aima executive director Florence Lombard (pictured), who launched a pre-emptive strike on the draft directive last week.

‘All of the major reports which analysed the crisis in depth, including the de Larosière report and the Turner review, concluded that hedge funds neither caused nor played a significant role in the crisis.

‘This directive undermines the findings of these reports and the vast amount of work that is currently being undertaken by the G20, Iosco and the Financial Stability Board. It also conflicts with the G20’s global plan for recovery and reform, which calls for regulators and supervisors to ‘reduce the scope for regulatory arbitrage’ and to ‘resist protectionism’.’

The Commission’s draft proposes subjecting EU-based managers with EUR100m or more under management to regulation, unless thy do not use leverage and have at least a five-year lock-up period, and would be non-EU domiciled funds from being marketed within the EU for at least three years, being admitted thereafter on condition that the jurisdictions of domicile offer adequate standards of regulation and tax information exchange.

‘Hastily prepared and without consultation, the directive contains many ill-considered provisions which are impractical and may prove unworkable,’ Lombard says. ‘The unintended consequences of these measures may put thousands of jobs in several major European industries under threat and slow down any economic recovery.

‘Additionally, many of the provisions will disadvantage European hedge fund managers against those outside Europe, which could prove an incentive for them to move business elsewhere – negatively impacting badly-needed tax revenues for member states.

‘We understand the great deal of political pressure facing the Commission. However, it is the Commission’s role to propose necessary, unbiased and effective legislation. This directive is punitive and falls far short of this goal. It also does not recognise or take into account the existing progressive and effective regulatory framework in some EU states.’

The association, which has more than 1,100 corporate members including managers of hedge funds and funds of hedge funds, prime brokers, legal and accounting firms and fund administrators in 40 countries, says is engaged with policy makers and regulators around the world and is supportive of fair and effective regulation.

Adds Lombard: ‘Aima’s new policy platform, published in February, includes support for the principle of transparency, through disclosure by large hedge fund managers of their systemically significant positions to national regulators, and global authorisation and registration of hedge fund managers.’

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