This attack on the alternative investment industry and hedge funds is getting serious in its content, as well as being put on a ‘fast-track’ implementation process. There is the spirit abroad in Europe of a vendetta against an industry that has actually done no harm but which the Franco-German axis sees as the lynch-pin of London’s pre-eminence as a world financial centre, which France in particular wants to make its own.
Open Europe has discovered that our government will not make the normal obligatory Impact Assessment on the sole grounds “because of the very foreshortened timescale on which the directive is being negotiated” . (An I.A. is designed to make sure that all legislation is only presented AFTER all the possible consequences have been listed, assessed and reconciled)
Christina
FINANCIAL TIMES 28.7.09
EU warned hedge fund proposals pose risks
By Sam Jones
The European Commission’s draft regulations for hedge funds will have “major consequences” around the world if enacted, warned the alternative investment management association on Monday, the industry’s global trade association.
International investors, such as pension funds, in particular would be hit by the “worldwide” fallout of the EU directive, said AIMA chief executive Andrew Baker in a statement.
“Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences,” he said.
“Global industry centres such as the United States, Canada, Switzerland, Hong Kong, Singapore, Japan, Australia and South Africa, will all be affected by this. This is not just an internal EU matter.”
Mr Baker’s remarks are a clear sign of recent efforts to ramp up opposition to the EU’s draft directive, which proposes strict passporting arrangements, leverage limits and higher capital requirements on alternative investment funds.
Lobbying groups and the UK government are now appealing internationally to try and increase pressure on the EU.
Mr Baker’s comments echo similar statements made by Lord Myners, the UK’s financial services minister, earlier this month.
At a meeting in London, Lord Myners told hedge fund managers that the UK was sending officials to lobby “in more than a dozen key EU capitals”.
Officials from the Treasury and the City of London have also been sent to the US in an effort to garner support. Diplomats from the foreign office are understood to be involved.
Mr Baker warned that the directive would have “protectionist consequences” were it passed in its current form.
Lawmakers in Brussels will be considering amendments to the directive when key EU parliamentary committees reconvene at the end of the summer.
TELEGRAPH
28.7.09
US Treasury steps into hedge fund row with EU
The US Treasury is becoming embroiled in the fierce row between hedge funds and the European Union over proposed rule changes which could damage the $1.4 trillion (£849bn) sector.
By James Quinn, Wall Street Correspondent
US Treasury officials are believed to be lobbying behind the scenes to alter terms of a controversial directive on the industry. The proposal, first published in April but still in draft form, would essentially allow funds managed in non-EU countries to sell funds to European investors but only if the regulation of those funds was equivalent to that seen in Europe, and even then only after a three-year transition period.
As Europe is the main centre for money-raising and management within the industry outside the US, the protectionist overtones in the directive have caused concern.
The quiet lobbying by the US Treasury is understood to be taking place at inter-governmental levels as well as in Brussels, and follows campaigning by major US hedge funds for federal intervention.
The industry's main body – the Alternative Investment Management Association (AIMA) – yesterday warned of the problems the proposed legislation could create. It said the directive could cause "potentially major difficulties", see investor choice limited and reduce competitiveness.
"Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences," said Andrew Baker, AIMA's chief executive.
"Global industry centres such as the US, Canada, Switzerland, Hong Kong, Singapore, Japan, Australia and South Africa will all be affected by this. This is not just an internal EU matter."
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GUARDIAN 28.7.09
City lobbying helps water down European hedge fund legislation plans
Hedge funds and buy-out firms have threatened to leave London if the alternative investment fund management directive is passed
• Elena Moya
Intensive lobbying by the City and ministers has succeeded in watering down a European plan to toughen the regulation of hedge funds and private equity firms.
Industry groups, the government and London mayor Boris Johnson have battled against a directive which they claim could threaten London's position as the European hub of the alternative management and buy-out industries.
Hedge funds and buy-out firms have threatened to leave London if the alternative investment fund management directive, which sets limits to their marketing and to the amounts they can borrow, is passed in its present form.
But this is now unlikely because Sweden, which holds the EU presidency, is willing to "remove unnecessary burdens on alternative investment funds", a source involved in the discussions told the Guardian. [In the EU-parliamernt the consensus is for tightenening the proposals not loosening them, And in the Council of Ministers Britain can easily be outvoted , so Sweden may be just foolishly optimistic -cs]
Sweden is reviewing feedback from about 15 of Europe's 27 member countries, and is expected to redraft the current document to "solve some of the problems" that have been raised, the source said. A compromise between the parties was expected.
Experts, including lawyers and economists, have already held four meetings over the directive, with another one scheduled on 8 September. The UK has led the criticism as London is home to 450 hedge funds, or about 80% of the European total, managing a combined £250bn. The industry employs about 10,000 professionals directly, and another 30,000 indirectly including service providers, such as lawyers and accountants.
"We are very pleased that the directive appears to be in safe hands and that the next stage of the discussion will have advanced the debate," said Andrew Baker, chief executive of the Alternative Investment Management Association (AIMA), the hedge fund industry body.
AIMA's complaints include the proposed borrowing limits, as well as a requirement to appoint repositories - or banks - that would hold insurance of the funds' assets in case of collapse.
"We know they are sympathetic with the industry about criticism of the protectionist angle, the one-size-fits-all approach, and some of the onerous measures that would threaten chunks of the investment management industry," Baker said. "They've given these objections quite a sympathetic hearing." [The Guardian is playing down the whole issue and don’t say who are the “They” that are ‘sympathetic ‘ -cs]
Property funds have also complained about the directive, in which they are also included.
"The directive contains a large number of detailed proposals that will affect the way that property funds are both managed and marketed," said the Property Industry Alliance - which includes associations such as the British Property Federation - in a letter to the Treasury seen by the Observer. "The directive is currently being introduced with limited consultation and on a fast-track timetable."
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NEW YORK TIMES - ‘Deal Book’ 27.7.09
Hedge Funds Take Aim at European Proposal
The trans-Atlantic feud over hedge funds is heating up.
On Monday, a trade group for the hedge fund industry accused the European Union of protectionism, arguing that laws under consideration there could result in hedge fund managers from outside the region being locked out of Europe’s lucrative market.
The Alternative Investment Management Association, which includes hundreds of hedge funds around the world as members, said in a statement that a draft directive by the European Commission, the European Union’s executive arm, on Alternative Investment Fund Managers would have an impact far beyond the borders of the European Union, one (of) the world’s largest markets.
“AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent,” the group said. “This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU.”
A draft of the proposed changes was made public in April, and is being debated in small working groups in the European parliament in Brussels. It would require fund managers operating in the 27 members of the union to abide by certain restrictions and regulations on their operating activity that go far beyond rules that have been proposed in the United States and elsewhere.
For example, the first draft of the resolution would require hedge fund managers to meet certain reporting criteria as well as new governance and risk management standards like minimum capital levels. The marketing of funds would only be allowed with a special marketing passport that the directive creates, the AIMA said.
While foreign funds can obtain these marketing passports, the lobbying group argues that the directive also delays their introduction by three years and imposes major obstacles (like demonstrating regulatory and tax equivalence) to obtaining them.
On Monday, The Wall Street Journal reported that the United States government is quietly lobbying Europe to soften the changes in the proposal and move to a more harmonized regulatory system.
European nations are trying to avoid a repeat of the financial contagion set off by the mortgage debacle in the United States. While hedge funds and their activities may not have been at the root of the crisis, European officials, especially those in France and Germany, argue that tighter regulation of financial market participants could help in preventing future crises.
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