Following the Mansion House speech by UK Chancellor of the Exchequer Jeremy Hunt, AIMA is pleased to have secured significant regulatory changes that benefit our members and the wider investment industry, the most important of which are related to the below.

Short Selling:

Following the review of short-selling rules launched by HM Treasury in December 2022, AIMA has been a vocal participant in the debate about how they should be reformed, highlighting the way in which public transparency of short positions disincentivises firms from taking those positions (thereby harming returns and market functioning) and the disproportionate cost associated with reporting of short positions to the FCA. The government has committed to addressing both of these issues through its response to the short selling review. Specifically, the government has said it will:

• Replace the current public disclosure regime based on individual net short positions with an aggregated net short position disclosure regime.

• Increase the current disclosure threshold for net short position reporting to the FCA from 0.1% to 0.2%.

A parallel consultation will also now open the possibility of scaling back short selling rules so that they no longer apply to sovereign debt and CDS.

Research Payments:

AIMA has also devoted significant energy in recent months to the clash between US and UK/EU rules on payment for research. The need for regulatory action was amplified when the SEC confirmed in 2022 that it would let lapse its no action relief that enabled firms subject to MiFID to pay for research on an unbundled, “hard dollar” basis without this triggering the requirement for their research counterparties to register as investment advisers. By moving to permit bundled payment for research and execution services in line with the conclusions of Rachel Kent’s Investment Research Review, the UK is moving its framework to be compatible with the structure of the US regime, making life considerably easier for investment managers with cross-border operations.

The FCA has already responded to the Investment Research Review to say that it is “open to consider swift actions, if needed, to support firms impacted by changes to regulation in other jurisdictions, based on discussion with individual firms or parts of the market”.

Securitisation:

This week's announcement was an important step towards securitisation markets playing a fuller role in the financing of UK businesses. For several years AIMA has highlighted the professional nature of the securitisation market to UK authorities and why a more flexible approach can boost the role the sector plays in supporting economic growth. 

We welcome the narrowing of the scope of the institutional investor definition to exclude non-UK AIFMs which will remove a significant source of uncertainty for our members. Empowering the FCA to tailor the rules also creates the opportunity for the UK to introduce other reforms and improve the ability of UK asset managers and their clients to invest in global securitisation products.

Commenting on these announcements, AIMA CEO Jack Inglis, said the following:

“AIMA is delighted with the sweeping package of UK regulatory reforms published following the Chancellor’s Mansion House speech: changing short selling rules to protect the confidentiality of investment managers’ positions; dealing with the clash between UK and US rules on payment for research; and a rethink of securitisation rules to make them more flexible and help reboot the market. These are important reforms that will be of huge benefit to the UK’s world-leading hedge fund industry.”

AIMA is standing by and ready to provide prompt responses to any media inquiries.