EU proposing to cripple financial markets with naked protectionism
This comes from a committed europhile and, in the light of what he
writes here, it is difficult to see why he should take that stance.
But he can clearly see that these measures would be disastrous for
Britain. Let us hope Brown will veto them - He can if he wants to!
Secondly I am posting also herewith a scathing report on the
composition of the EU Commission’s advisory group, which follows.
Its French origins are crystal clear - centralised direction and
bureaucratic control
xxxxxxxxxxx cs
=============================
FINANCIAL TIMES 18.5.09n UK
Europe’s classic exercise in closet protectionism
By Paul Marshall
If opponents of the European Union are looking for evidence of
political meddling and overreach, they could hardly find a better
example than the new draft directive on alternative investment fund
management. The proposal, aimed at imposing new regulation on hedge
funds and private equity, is a politically driven effort to place
obstacles in the way of an industry that is almost exclusively based
in the US and the UK. It makes a mockery of any notion of
subsidiarity – taking decisions at the lowest possible level – and is
a classic exercise in closet protectionism.
I say this as a committed European [well nobody can be perfect can
they? -cs] and a member of the advisory council of Business for a
New Europe (BNE), which strongly supports the UK’s active engagement
in Europe. Indeed, BNE was set up to promote a reformed, enlarged and
free-market EU. [Don’t go on about it or everyone will give up -cs]
The trouble with the draft directive is that it promotes no such
thing. Instead, it proposes lifting authority for the initial
authorisation, monitoring and supervision of alternative investment
fund managers, as well as powers over the provision of services and
marketing of funds, from the competent national authorities to the
European Commission. The Commission may continue to delegate some of
these powers to the countries, such as authorisation of managers. But
the damage is done. The directive transfers ultimate powers to
Brussels at the expense of national regulators.
It also has a strong protectionist element, since it would prevent
fund managers in third countries – such as the US – from accessing
the European market unless those countries adopted “equivalent”
regulation.
Try this as a sample of the language: “The key functions and
activities which are likely to give rise to risks for European
markets, investors or counterparties are required to be undertaken by
EU-established entities, operating subject to harmonised rules.”
The content of the draft directive is a surprise to all those who
have closely followed recent regulatory developments. Although hedge
fund managers in the UK have always been regulated just like any
other fund managers, the industry recognises that it needs to
demonstrate to the outside world that it acts responsibly. That is
why some of the leading funds, including Marshall Wace, joined
together recently to promote tough voluntary standards – an approach
endorsed by the recent gathering of leaders of the Group of 20
nations in London. The Commission’s draft legislation completely
ignores the approach the G20 backed.
The Commission has also ignored in-depth analysis carried out by 14
distinguished experts into the causes of the financial crisis and the
measures needed to ensure it does not happen again. The De Larosière
report carried out for the European Commission [This is a deeply
flawed report, allegedly by 14 “academics “ but turns out to be by
existing bankers and regulators with a British member who had to
resign after the Northern Rock fiasco. - I give Private Eye’s report
below -cs] and the Turner report for the UK government both produced
level-headed analyses of the failings of the global financial system.
But neither could have led anyone to believe that the alternative
investment industry was a dangerous source of risk, let alone the
cause of the financial crisis.
Despite all this, the European Commission has steamed ahead without
proper input from those most affected by its proposed measures – the
investors and fund managers. It has also based its recommendations on
an assessment of the risks posed by alternative investments that is
at best debatable and at worst reveals a strong prejudice against
this industry.
At a time when the overall reputation of the financial sector is so
poor, it is hardly surprising that many people do not have a great
deal of sympathy for the alternative investment industry. Most people
do not really understand it or believe in its ability to create value
for society as a whole, and I accept that it is up to us to explain
ourselves better. But everyone can see what a misguided political
project can lead to. This draft has been rushed through under extreme
political pressure in a key electoral period, ahead of votes for the
European parliament and in Germany. Is the EU really going to be
built on such unashamedly protectionist initiatives, which
marginalise the countries most affected?
Admittedly this is only the beginning of a long process. The final
directive will have to be debated and approved. There will be the
opportunity to modify it substantially and I hope the British
government will take a lead in this. But the present draft is a very
bad start. All it does is enhance the suspicions held by some in the
UK that it is highly risky to engage with the continental Europeans
on matters of crucial British interest.
----------------------------------------------------
The writer is chairman of Marshall Wace
=============================
PRIVATE EYE 1236 15-28.5.09
BRUSSELS SPROUTS
Excitement is building in anticipation of 27 May , when the European
Commission will present its post-G20 summit solution to the financial
supervision failings that allowedthe banking crisis.
According to commission president, Jose Manuel Barroso, it will
largely be based on a supposedly independent report by French former
central banker Jacques de Larosière.
The commission’s register says De Larosière’s advisory group is
composed of ‘academics’, but this is not quite true. In fact the
group is made up of bankers and regulators, including Sir Callum
McCarthy, who was chairman of the UK’s Financial Services Authority
between 2003 and 2008.
As McCarthy left the FSA in the wake of the Northern Rock failings,
he might seem an odd choice to advise on the future of financial
supervision in Europe. And this impression might be reinforced by
the information-gatherings held by De Larosière’s group - all were
with bankers and regulators.
writes here, it is difficult to see why he should take that stance.
But he can clearly see that these measures would be disastrous for
Britain. Let us hope Brown will veto them - He can if he wants to!
Secondly I am posting also herewith a scathing report on the
composition of the EU Commission’s advisory group, which follows.
Its French origins are crystal clear - centralised direction and
bureaucratic control
xxxxxxxxxxx cs
=============================
FINANCIAL TIMES 18.5.09n UK
Europe’s classic exercise in closet protectionism
By Paul Marshall
If opponents of the European Union are looking for evidence of
political meddling and overreach, they could hardly find a better
example than the new draft directive on alternative investment fund
management. The proposal, aimed at imposing new regulation on hedge
funds and private equity, is a politically driven effort to place
obstacles in the way of an industry that is almost exclusively based
in the US and the UK. It makes a mockery of any notion of
subsidiarity – taking decisions at the lowest possible level – and is
a classic exercise in closet protectionism.
I say this as a committed European [well nobody can be perfect can
they? -cs] and a member of the advisory council of Business for a
New Europe (BNE), which strongly supports the UK’s active engagement
in Europe. Indeed, BNE was set up to promote a reformed, enlarged and
free-market EU. [Don’t go on about it or everyone will give up -cs]
The trouble with the draft directive is that it promotes no such
thing. Instead, it proposes lifting authority for the initial
authorisation, monitoring and supervision of alternative investment
fund managers, as well as powers over the provision of services and
marketing of funds, from the competent national authorities to the
European Commission. The Commission may continue to delegate some of
these powers to the countries, such as authorisation of managers. But
the damage is done. The directive transfers ultimate powers to
Brussels at the expense of national regulators.
It also has a strong protectionist element, since it would prevent
fund managers in third countries – such as the US – from accessing
the European market unless those countries adopted “equivalent”
regulation.
Try this as a sample of the language: “The key functions and
activities which are likely to give rise to risks for European
markets, investors or counterparties are required to be undertaken by
EU-established entities, operating subject to harmonised rules.”
The content of the draft directive is a surprise to all those who
have closely followed recent regulatory developments. Although hedge
fund managers in the UK have always been regulated just like any
other fund managers, the industry recognises that it needs to
demonstrate to the outside world that it acts responsibly. That is
why some of the leading funds, including Marshall Wace, joined
together recently to promote tough voluntary standards – an approach
endorsed by the recent gathering of leaders of the Group of 20
nations in London. The Commission’s draft legislation completely
ignores the approach the G20 backed.
The Commission has also ignored in-depth analysis carried out by 14
distinguished experts into the causes of the financial crisis and the
measures needed to ensure it does not happen again. The De Larosière
report carried out for the European Commission [This is a deeply
flawed report, allegedly by 14 “academics “ but turns out to be by
existing bankers and regulators with a British member who had to
resign after the Northern Rock fiasco. - I give Private Eye’s report
below -cs] and the Turner report for the UK government both produced
level-headed analyses of the failings of the global financial system.
But neither could have led anyone to believe that the alternative
investment industry was a dangerous source of risk, let alone the
cause of the financial crisis.
Despite all this, the European Commission has steamed ahead without
proper input from those most affected by its proposed measures – the
investors and fund managers. It has also based its recommendations on
an assessment of the risks posed by alternative investments that is
at best debatable and at worst reveals a strong prejudice against
this industry.
At a time when the overall reputation of the financial sector is so
poor, it is hardly surprising that many people do not have a great
deal of sympathy for the alternative investment industry. Most people
do not really understand it or believe in its ability to create value
for society as a whole, and I accept that it is up to us to explain
ourselves better. But everyone can see what a misguided political
project can lead to. This draft has been rushed through under extreme
political pressure in a key electoral period, ahead of votes for the
European parliament and in Germany. Is the EU really going to be
built on such unashamedly protectionist initiatives, which
marginalise the countries most affected?
Admittedly this is only the beginning of a long process. The final
directive will have to be debated and approved. There will be the
opportunity to modify it substantially and I hope the British
government will take a lead in this. But the present draft is a very
bad start. All it does is enhance the suspicions held by some in the
UK that it is highly risky to engage with the continental Europeans
on matters of crucial British interest.
----------------------------------------------------
The writer is chairman of Marshall Wace
=============================
PRIVATE EYE 1236 15-28.5.09
BRUSSELS SPROUTS
Excitement is building in anticipation of 27 May , when the European
Commission will present its post-G20 summit solution to the financial
supervision failings that allowedthe banking crisis.
According to commission president, Jose Manuel Barroso, it will
largely be based on a supposedly independent report by French former
central banker Jacques de Larosière.
The commission’s register says De Larosière’s advisory group is
composed of ‘academics’, but this is not quite true. In fact the
group is made up of bankers and regulators, including Sir Callum
McCarthy, who was chairman of the UK’s Financial Services Authority
between 2003 and 2008.
As McCarthy left the FSA in the wake of the Northern Rock failings,
he might seem an odd choice to advise on the future of financial
supervision in Europe. And this impression might be reinforced by
the information-gatherings held by De Larosière’s group - all were
with bankers and regulators.
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