AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

EU Shadow Banking

On 29 January 2014, the European Commission issued a legislative proposal for a European Regulation on the transparency of securities financing transactions (SFTs). This proposal sits alongside the banking structural reforms proposal also issued on 29 January 2014 and is intended, among other things, to prevent circumvention of the latter by banking entities shifting their activities over to the shadow banking sector.

Relevant requirements include:

  • all SFTs to be reported to a registered trade repository;
  • detailed ex ante disclosure and periodic reporting by investment funds of SFT powers and activities, as well as rehypothecation (including UCITS funds and managers and AIFs); and
  • written consent and ex ante risk disclosure for any transaction which involves the rehypothecation of assets

This proposal follows the recommendations made within the Financial Stability Board (FSB) report of August 2013 on a policy framework for addressing shadow banking risks in securities lending and repos, as well as a European Commission Communication on shadow banking in September 2013.

The proposal will now pass to the European Parliament (EP) and Council of the European Union for disucssion. Although, due to the EP elections, it is likely that progress will not be made on this file until late 2014/early 2015.

 

AIMA has drafted a Summary and Position Paper on the Proposal.

 

Key legislative documents

EC Proposal on reporting and transparency of securities financing transactions (January 2014)

Annexes to EC Proposal on reporting and transparency of securities financing transactions (January 2014)

 

AIMA documents

AIMA Position Paper on EC Proposal on reporting and transparency of SFTs and rehypothecation (May 2014)

AIMA Summary of EC Proposal on reporting and transparency of SFTs and rehypothecation (April 2014)

Response to European Commission Green Paper on Shadow Banking (June 2012)

 

Consultation documents

European Commission Green Paper - Shadow Banking (March 2012)

 

Other documents

EC Communication on Shadow Banking (September 2013)

ECON Report on Shadow Banking (2012/2115(INI)) (25 October 2012)

 

 

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  1. AIMA's Policy Principles
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    1. EU Asset Management Regulation
      1. AIFMD
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        1. ETFs and Structured UCITS
      5. Venture Capital
      6. Shareholder Rights Directive
    2. US Hedge Fund Adviser Regulations
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      2. Incentive-Based Compensation
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      1. UK regulatory reform
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      6. Germany
      7. CFTC Automated Trading
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      1. Solvency II
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      2. Indices as Benchmarks
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    3. FATCA
    4. FIN 48 and IAS 12
    5. Financial Transaction Tax
    6. Investment Manager Exemption
    7. UK Offshore Funds Regime
    8. Other
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    1. Guidance Notes
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      1. BEPS
      2. Dealing Commission
      3. Derivatives
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      6. High Frequency Trading
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      8. Other Hot Asset Management Topics
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      11. Trading
      12. UK Partnership Tax Review
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