Apparently more than a thousand amendments have been tabled for the Alternative Investment Fund Management directive, Brussels’ attempt to bring private equity and hedge funds under its loving control.
This unprecedented level of rewriting during the legislative process is a testament to the inexorable sway of the alternative asset management industry. The original, draconian, draft of the AIFM was seen as a shy at the ever popular Aunt Sally of hedge funds, or ‘locusts’ as they are known in Germany. The usually painstaking and thoughtful asset management unit of the European Commission’s internal markets division had apparently come under political pressure to bring out a hardhitting draft directive in a hurry.
At leisure, however, even the European Parliament found regulating a European hedge fund industry too harshly might not be that good an idea. Its own impact study found implementation of the proposed directive as it stood could result in a 0.2 per cent contraction in the combined GDP of the European Union.
Possibly, however, the initial announcement and pained squawks for the industry were enough to satisfy the hedge fund haters, and now the tedious work of actually piecing together something actually workable can be done out of the glare of the media spotlight.
Certainly the number of journalists prepared to dig through all 1000+ amendments is likely to be as slim as the number of readers prepared to read about them.
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The arrival of really expensive funds in the Ucits space, notably those being launched by hedge fund managers, makes the funds run by traditional long-only managers look quite reasonable.
Poul Nyrup Rasmussen, self-styled bogeyman of alternative investment managers
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.
just like a hedgie
Why is running a hedge fund like competitive surfing? Apparently, it’s a mixture of the length of your wave and how aggressive your moves are.
That is the opinion of Pedro de Noronha, one of the few who have done both for a living. Mr de Noronha, who left surfing for the world of financial services because he wanted more intellectual stimulation, says the kind of strategic thinking that stood him in good stead while on a board helps in managing Noster Capital, his hedge fund.
If the high-powered hedge fund world is anything to go by, the worst appears to be over for the beleaguered investment industry.
Despite the fact that hedge funds were not to blame for the spectacular implosion of the global financial system, the sector copped more than its share of the fallout, with poor performance, widespread redemptions, gating, suspensions and Madoff combining to make a veritable toxic cocktail.
New Zealand has a small but perfectly formed hedge fund industry. With nearly 30 managers signed up to NZara, the New Zealand Absolute Return Association
, they can proudly point to two years of outperformance against global hedge funds, CTAs or equity markets.
It is possible they look good over the two years of their existence because the index is largely made up of global macro funds, which have done well in that time. Anthony Limbrick, chief executive of Pure Capital and guiding light of NZara, claims Kiwi hedge funds do well because you have to be good to survive so far from the centre of things. The challenge is worth meeting, however, because the lifestyle is so good, he says. For dedicated hedgies, the chance to run money while living in beautiful surroundings near home and family is very attractive.
The only question is, if it’s so lovely in New Zealand, why are there so many Kiwis in London?
Lord Turner warned hedge funds might become a target in Europe
Even the European Commission’s own experts think it is going too far with its proposals for regulating the hedge fund industry.
Jaques de Larosière, author of an influential report on financial supervision, told a seminar in London the Commission’s draft directive on alternative investment management went much further than he had recommended. The report came to the conclusion hedge funds were not a systemic issue, but the draft directive proposes regulating some aspects of alternative funds even more tightly than Ucits, the retail investment vehicle.
As leader of a ‘High Level Group’, one might expect M. de Larosière’s words to have some weight.
The seminar, hosted by Business for New Europe, also heard from Lord Turner, chairman of the UK’s Financial Services Authority, who warned hedge funds might become a “target” in Europe, and Lord Myners, the UK financial services secretary to the Treasury, who called the directive “flawed”.
The Alternative Investment Management Association welcomed these comments – as well it might!
Ms Kleinworth (the rat) goes short on Treasuries
Fed up with paying wildly expensive and highly educated mathematicians to man your trading desk? Worried quants are destroying the financial system (again) but unsure how to replace them? Rat Traders has come up with an economic and efficient solution, available from any zoology department, pet shop or nearest sewer.
Brussels has been working overtime on financial matters, coming out with no less than three controversial documents today. Presumably the European Commission is trying to cram in as much as possible before a new Commission is appointed in September. Charlie McCreevy, the EU internal market commissioner, wants to leave his mark.
There has been much tearing of hair and gnashing of teeth by private equity managers and hedge funds over one of these documents, which proposes to introduce a pan-European regulatory framework for alternative investment managers.