AIMA Says New Regs May Bar EU Investors From Non-EU Funds

Sep 26 2011 | 10:46am ET

The Alternative Investment Management Association, a hedge fund lobby group, is afraid EU regulation of the industry may prevent EU investors from putting their money in funds registered outside the union.

AIMA’s concerns focus on proposals from the European Securities and Markets Authority, the body advising on the specific rules and regulations that will enable implementation of the EU Alternative Investment Fund Manager Directive, now expected to come into force in mid-2013.

The hedge fund group says ESMA’s latest proposals go further than what was required—or even permitted—by the legislation agreed last year by the European Council, the European Commission and members of the European Parliament.
 
AIMA says ESMA has reintroduced the concept of “equivalence,” which was rejected during the Level 1 negotiations (the current negotiations are “Level 2”). Under such strict equivalence, says the lobby group, it would be difficult for EU managers to delegate portfolio management to third-country asset managers.
 
Said AIMA CEO Andrew Baker: “The concept of equivalence was thoroughly considered, discussed, and, importantly, dismissed during the legislative process in a number of areas, as it was apparent that it would be unworkable.
 
“The practical implication of the proposals is that some investments into non-EU jurisdictions would become very difficult, if not impossible. Furthermore, it is difficult to imagine how the equivalence of dozens of jurisdictions could be assessed within the implementation deadline. In some parts of the proposal it's not even clear who would be responsible for such an assessment.”
 
AIMA has over 1,250 corporate members—including hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms, investors, fund administrators and independent fund directors—in over 40 countries worldwide
 


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