AIMA hosts UK Parliamentary reception
By Jack Inglis
Published: 30 November 2015
Britain’s General Election may have been six months ago, but it is often during the critical first months of a new parliament when policy ideas begin to take shape and key alliances are formed. This is why AIMA has been stepping up its engagement with policymakers in the UK in recent weeks and months.
Capping this recent effort, on Wednesday, 25 November, was a reception that we hosted in the Palace of Westminster, where members of both Houses of Parliament gathered alongside many of our members from the UK hedge fund sector to hear about the contribution that hedge funds are making to the UK economy.
The event, sponsored by the CME Group, featured a distinguished set of speakers comprising Chris Skidmore MP (Conservative), the Parliamentary Private Secretary to the Chancellor of the Exchequer; Iain Wright MP (Labour), the Chair of the Business, Innovation and Skills Select Committee; Michelle McGregor-Smith, the CEO of BA Pension Investment Management; and Henry Kenner, the CEO of Arrowgrass Capital Partners.
Among the points that were raised during the event –
The hedge fund sector in the UK comprises around 500 businesses and employs around 40,000 highly skilled people, who pay corporation and income taxes worth over £4 billion to the UK public purse.
While much hedge fund activity may seem complex and esoteric, it all links back, whether directly or indirectly, to the real economy.
Hedge funds provide liquidity in the derivatives markets that is vital for other users. Without interest rate derivatives trading by macro hedge funds, banks and other lenders would find it more difficult or risky to offer fixed-rate mortgages to their customers. Without commodity derivatives trading by hedge funds, airlines would find it more difficult to control the costs related to their fuel consumption. Without credit derivatives trading by hedge funds, banks may have to liquidate wholesale portfolios of SME loans and restrict finance to an already cash-starved sector.
Hedge funds are increasingly lending directly to businesses, filling a void left by bank retrenchment.
Many hedge funds are also extremely active and engaged shareholders – they drive improvements in the share price, operating performance and governance of the companies in which they invest.
This was a very well-attended and useful event, and the MPs and peers with whom I spoke were clearly very interested to learn more about hedge funds and about the activity of the industry as a whole. We took away much advice on how we can continue to fine tune our efforts. There is much work to do, but we look forward to continuing to build on these important relationships with policymakers in the UK, as well as around the world, during 2016 and beyond.