Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .


Alternative Investment Fund Manager’s Directive Q&A

Global Banking And Finance 1 News

By Andrew Rubio, CEO at Throgmorton UK Ltd

What were the initial intentions of the AIFMd?
After the events of 2008, the EU felt that more regulations and controls were needed to be placed around the alternative investment fund sector within the EU.  Given that the UCITS funds had been defined and regulated for several years, the AIFMd was aimed at regulating any alternative fund product that wasn’t a UCITS product.  The intention was to provide investors with protection of such funds failing and to limit the potential from any systemic risk that might be posed by such products.

Why has this piece of legislation been much derided?
The fact that if a product isn’t a UCITS product has meant that the legislation attempts to deal with a “one size fits all” mentality.  As such, hedge fund managers, private equity managers and real estate fund managers are all being treated the same way.  Given the fundamental differences, significant inconsistencies abound throughout the directive.  Furthermore, the initial drafting was completed with little or no consultation with the industry with the resultant document being badly drafted, inconsistent, and in parts, wholly inoperable.

Have politicians become too involved in its evolution?
Absolutely, this has clearly been a largely political exercise intended to appeal to the left of centre supporters in Europe.  Following the credit crunch, the politicians wanted to teach hedge fund managers a very public lesson.  Perversely, it has been shown, time and time again, that the alternative sector did not cause the problems that the directive sought to police. Irrespective of this, the EU has continued unabated with its hedge fund bashing.  Furthermore, given that the alternative investment industry in Europe is largely in the UK, it was also an opportunity for the continental politicians to have a swipe at the Brits.  A bit like the voting for the UK in the Eurovision Song Contest, but with more vigour!

Once implemented what will be the main affects be on your clients?
As the final drafting has not been completed, it is hard to say what the final impact will be for our clients.  Having said that, the main areas of concern are the depository rules, the third country provisions and remuneration.  Given that a significant number of hedge funds are domiciled offshore in jurisdictions such as The Cayman Islands, the issue of whether such funds can be marketed in the EU is a cause for concern.  To an extent, the AIFMd is attempting to create “fortress Europe”, with such protectionism angering non EU fund managers. In the meantime, and potentially until as late as 2018, hedge funds managers will still be able to market their funds in the EU through the private placement regimes.  And as for remuneration constraints, anything that is seen as a restriction on entrepreneurial pay rates is anathema to those involved.

How will it affect your business?
Again, we do not know.  For the time being, it is a waiting game but we are closely monitoring the situation.  Potentially, there might be some changes to fund management entity structures which could provide additional work for us.

Do you foresee more regulation for the fund management industry being implemented in the next few years?  
With Dodd Frank in the US and Basel III and the AIFMd in Europe, there is more than enough on everyone’s plate for now.  And I don’t just mean the industry.  The regulators and politicians have an awful lot to deal with at the moment.  I can’t see there being too much more for the short to medium terms, as the aforementioned changes are yet to come into effect.  And once they do, everyone will have to see how it is working, iron out bugs and deal with the vast mountains of information that will have been reported.  And the sixty four million dollar question:  what to do with that information!

Global Banking & Finance Review


Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post