Tuesday May 18 2010

News Source: Fund Regulation

Focus: AIFMD

Type: General

Country: European Union




The European Parliament Economic and Monetary Affairs Committee (ECON) has adopted its position on the Alternative Investment Fund Managers (AIFM) Directive- the draft EU law regulating managers of alternative investment funds, including hedge funds.

MEPs voted for new ways to deal with managers and funds located outside the EU, a proportionality system to regulate less risky funds more lightly, and rules on remuneration policies and short selling. They also made changes to the directive `s transparency and risk reduction rules.

Under the legislation as amended by ECON, alternative investment fund managers (AIFMs) in third countries would have to comply with the directive in order to market funds around the EU. Funds such as private equity and investment trusts would be more lightly regulated than hedge funds and some other types of alternative investment funds (AIFs) would be completely exempted.

The main changes put forward by MEPs to the Commission `s initial draft are intended to increase investor protection and transparency while at the same time reducing the potentially protectionist dimension of the rules on access to the EU market from the outside.

Finance ministers who met in Brussels today (Tuesday) have also sealed an agreement on the directive but differences still remain with the main one being in relation to the ” European Passport” proposal, which would allow hedge fund managers to operate across the EU on the basis of a single registration in one of its member states, instead of having to seek authorisations from each country they operate in – http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114493.pdf` text-underline: none

The Majority of Member States want to limit the passport to hedge funds formally registered in the EU, which in effects bans those managed from within the EU but legally based in non EU Jurisdictions.

Negotiations are now expected to take place between MEPs and the Council of Ministers ahead of the first-reading vote by the full Parliament, scheduled for July.