This is what happens when you let loose uninformed politicians on a delicate and precisely structured business. You wreck it!
As is mentioned here many pension funds across Europe are desperately worried at this mayhem
Christina
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FINANCIAL TIMES 21.9.09
EU rules would see hedge funds go overseas
By Sam Jones, Hedge Fund Correspondent
Nearly half of the UK’s hedge funds are likely to move abroad if new EU regulations are passed, according to a comprehensive new study of the alternative asset management industry due to be released on Monday.
The findings – based on a survey of 121 managers, looking after $384bn (£236bn, €261bn) of client assets, the bulk of the European industry – come as UK and American politicians step up their efforts to modify the EU’s controversial draft alternative investment fund manager directive.
The draft AIFM rules are expected to be a subject of discussion at the G20 Pittsburgh summit at the end of this week.
The EU directive proposes greater transparency, restrictions on leverage and higher capital requirements for hedge funds, but has come under fire for being unworkable and heavy-handed.
According to the survey by the think tank Open Europe, just over 42 per cent of UK managers said the rules would be likely to force them abroad if the draft directive was passed in its current form.
The hedge funds surveyed contributed approximately £5bn in tax revenues to the Exchequer last year, said the report.
Several fund managers said it was not simply a matter of choice. “This isn’t just grandstanding; we simply can’t run our business according to these rules,” the chief operating officer of one of London’s largest hedge funds told the FT.
“The tax revenues generated over two years by AIFMs in the UK could pay for the entire 2012 London Olympics,” according to Open Europe.
“Expressed differently, if the revenues from the AIFMs were lost, it would take a 20 per cent increase in the average council tax bill to make up for them.”
Fund managers themselves estimated in the report that the directive would cost them billions in compliance costs.
“The directive will cost the private equity and hedge fund industries in the EU between €1.3bn and €1.9bn (£1.17bn, $2.8bn) in the first year. The annual recurring cost is estimated at between €689m and €985m.”
Hedge fund investors – many of whom are large institutions such as pension funds and insurance companies – have already begun to speak out against the directive.
Hermes, which manages the BT pension fund, warned of the increased cost it would have to bear as a result of the new regulations last month.
More recently, a group of Dutch pension fund managers, including the world’s third-largest, APG, said the directive threatened to “adversely affect many millions of European citizens”.
In a speech given in London last week, Jean-Pierre Jouyet, the head of the French markets regulator, meanwhile said he was “convinced” opposing positions could be reconciled.
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