The UK is bringing out its big guns in an attempt to shoot down the European Commission’s proposed rules for alternative investment fund managers.
In Monaco, Dan Waters, asset management sector leader at the Financial Services Authority, fired broadsides at several aspects of the directive in a speech at the Fund Forum conference.
He doesn’t like the blanket coverage of the directive, bringing in virtually all non-Ucits funds, and thinks the E100m (E500m for non levered funds) threshold is too low. He is not convinced of the need for leverage limits, pointing out that hedge funds had much lower leverage levels than banks during the financial crisis. He is concerned about the requirements for depositary banks, saying they could have “damaging and unjustified consequences”. And he is not keen on the equivalence tests demanded of jurisdictions of managers based outside the EU, and of non-EU funds.
Imposing an outright ban on third country funds and managers “would extinguish valuable, open and successful markets without justification” and might invite retaliation, he says.
Mr Waters also draws attention to the five -year long process of getting Ucits IV sorted out - a little long but the changes were widely debated and broadly agreed. This proposed directive was flung together in great haste with the result that the scope and content are in many cases “a surprise and complete shock”.
All in all, pretty hard-hitting stuff. If the EC was in any doubt that the Brits don’t like the AIFM directive, they will get the message now.