Hedge funds to fight EU proposals
Hedge funds are raising a war chest to bankroll a battle against planned European red tape that they say will strangle their businesses and cost the UK economy billions of pounds a year.
The fighting fund will be used to resist the planned European Commission Directive on Alternative Investment Fund Managers that critics say will have a devastating impact on the €2 trillion sector and threatens to spark a migration of hedge funds from the UK, where 85pc of those in Europe are based.
The directive proposes a new one-size fits all supervisory and regulatory framework for AIFMs, which under the regime would lump together hedge funds, long only funds, private equity firms and even family offices.
It covers areas such as borrowing limits, transparency and the right to operate and sell to Europe.
But it has spooked the hedge fund world, which has begun lobbying across the EU and the UK to head off parts of the proposal it believes will make its industry unworkable.
The Alternative Investment Management Association, the UK trade body that is co-ordinating opposition, is now seeking funds to step up the campaign, which is backed by a steering committee that includes BlackRock, Man Group, Lansdowne Partners, and Marshall Wace.
Andrew Baker, head of Aima, and BlackRock's investment manager, Douglas Shaw, have set out a global timetable to lobby political figures, investor groups and trade associations in European capitals and across the world to raise vital awareness and votes to get the Directive changed.
Mr Baker said: "The industry needs to accept that the directive will not go away, but it needs to be substantially re-written. This means we have to effect change in the EU parliamentary process and within the EU Council."
Mr Baker explained that Aima fully supported further regulation and increased transparency but, he added, the directive was a "rag-bag" of proposals that painted a distorted picture and could make operating in the EU almost impossible.
He also said it also robbed investors of their right to chose the funds they wanted to invest in - 95pc of which could lose the right to operate under the new regime
The City of London Corporation this week welcomed a European Council decision to discuss the proposal further. Stuart Fraser, chairman of the policy and resources committee at the Corporation, said: "If the legislation is not changed the cost to the British economy will be huge."
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