London fails to delay vote on EU hedge fund regulation

14 May 2010 | 09:25
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London has failed in a bid to stall voting on a controversial EU plan to tighten regulation on alternative investment funds.

British diplomats from the capital, home to about 80% of Europe's hedge funds, lobbied in Brussels, Berlin and Paris this week to delay an EU ballot on the Alternative Investment Fund Management directive.

The directive was the subject of a heated exchange on BBC news between hedge fund manager Hugh Hendry (pictured) and head of the European Socialists Poul Nyrup Rasmussen in March.

The UK has failed to put off the vote, which will proceed as planned on Tuesday, when the EU's finance ministers meet.

Richard Saunders, IMA chief executive, is taking a pragmatic approach to the directive.

He says: "Our best hope is that this directive will come up with something the industry can live with."

Published by the EC last April, the AIFM proposes forcing hedge and private equity funds to cap their leverage, reveal more information to investors and regulators, and have their assets held in safe custody and valued independently, among other measures.

The directive's proposal to bar funds that do not comply from taking European investors' money raised ire in the US, home to about half the world's hedge funds.

US Treasury secretary Timothy Geithner wrote to EU officials in March warning them not to effectively ban US funds from the EU marketplace.

The IMA undersigned a letter jointly with the NAPF and hedge fund trade body Aima which it sent this week to the European Parliament, urging it not to support an amendment that would keep the ban in place.

Saunders and his pension and hedge fund counterparts wrote: "It will reduce choice and drive down returns for pension funds and other investors, as they will no longer be able to select their investments from among the best available products globally.

"This will undermine Europe's competitiveness. There is a real risk that it would provoke retaliatory action in non-EU jurisdictions, which would damage the European financial services industry and the whole European economy."

The AIFM directive has been subject to some alterations while Sweden held the rotating EU presidency, but present incumbent Spain has refused a delay on voting.



Categories: Hedge Funds

Topics: Ima

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