It seems the discussions on the European Commission’s much reviled draft directive on alternative investment fund managers are taking place after the event rather than before, as is usually the case with EU legislation.
The Financial Services Authority, the UK regulator, is focusing on this one topic in its asset management conference tomorrow. This follows last week’s debate, held in London’s Guildhall, between Poul Nyrup Rasmussen, self-styled “bogeyman” of alternative investment managers, and Lord Myners, the UK’s City Minister.
Later this month, the Eurofi Financial Forum will devote a session to mulling over the directive. But the terms of its debate suggest a different perspective from that of the London crowd. It will address these questions:
Are the measures currently proposed by the EU Commission for Alternative Investment Fund Managers sufficient and appropriate to ensure investor protection and financial stability? What are the possible shortcomings and loopholes of the proposed Directive? Should all alternative investment funds be treated in the same way? Would more detailed product specifications bring any additional benefits, what would be their downsides? Are proposals made for non-EU funds adequate? What impacts on existing domestic and non-EU non harmonized funds? What way forward taking into account the needs of the different stakeholders?
Shortcomings and loopholes are not what are agitating UK politicos and regulators.
But as everyone bemoans the lack of consultation on the directive, some are suggesting there was plenty of opportunity to put the industry point of view in discussions over the previous two years on possible legislation aimed at reining in hedge funds and private equity.
A paper by Karel Lanoo for the European Capital Markets Institute, published in June, says the draft rules “have been a long time coming” but nobody was paying attention.
The industry has thus probably woken up to something it should have been aware of for
years. The approaching storm was visible on the horizon; the industry just didn’t see it
coming and somehow still believes it can be avoided.
Trade bodies thought the noise being made by Mr Rasmussen and others would not come to anything, and it was just “rehashing old misconceptions”, as Aima, the Alternative Investment Managers Association, told FTfm last year.
Mr Lanoo does not think hedge funds are doing themselves any favours by the noise they are making:
By reacting so ferociously to the proposal, which largely follows the EU mainstream and accepted wisdom on the crisis, the industry is behaving as though it has something to hide.
Will the coming conferences reverse that impression I wonder?