AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

Draft Directive 'Needs Major Surgery' - Lord Myners

07 July 2009

The European Commission’s Alternative Investment Fund Managers draft directive requires “major surgery”. That’s according to Paul Myners, the UK Financial Services Secretary to the Treasury, who was speaking at an Alternative Investment Management Association (AIMA) event this morning in London.

Lord Myners stressed that “the UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say” and said the UK government’s aim was “a framework which allows efficient, well run and well regulated fund managers to compete for business without restriction across the EU and to make the EU a base from which to compete in global markets.” But he said that the draft directive “needs major surgery before this can be delivered”.

Lord Myners expressed concern about the protectionist impact of the directive and argued that “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”. He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. And on the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.

Lord Myners said that the UK government was “reaching out bilaterally to leverage natural alliances and win over others” in Europe. But he pointed out that managers threatening to quit the UK “will make my job harder” and would not be well received in Europe. And he called on institutional investors to make their voices heard on the directive. He said, “if institutional investors can make clear which regulatory safeguards they want to see applied to their fund managers and which they find to be costly and unnecessary, this will send a powerful message to policymakers”.

The UK Financial Services Secretary to the Treasury concluded by arguing that “an open single market in fund management must be a major opportunity for Europe and we must all do our bit to ensure we deliver the best possible result for EU investors and for the future of the EU funds industry”.

- Ends -

For media enquiries, please contact Christen Thomson, AIMA Director of Communications, on +44 (0)2078228380; email – cthomson@aima.org

Editors’ Notes:

The speech by Lord Myners is on the HMT website: http://www.hm-treasury.gov.uk/speech_fsst_070709.htm

About AIMA

As the only truly representative global hedge fund association, AIMA, the Alternative Investment Management Association, has more than 1,100 corporate members worldwide, based in 40 countries.

Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.

AIMA is a dynamic organisation that reflects its members’ interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website, www.aima.org.

 
 
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