Speaker and Liberal MEP Wolf Klinz believes leverage has to be addressed in the AIFMD. In order to control risk, there's a need to know how much money the fund has borrowed and on what conditions. Asset stripping should be banned.
The EU Financial Future Forum’s main activities are event-based, giving members and interested stakeholders a platform to discuss key issues and voice any concerns they may have.
Florence Lombard, Executive Director of AIMA, raised the following industry concerns with regard to the new Rapporteur draft report:
· Disclosure: the industry agrees with the threshold for disclosures of systemically relevant data of US$ 1bn. Lombard said that AIMA is working with the FSA and other key regulators to develop an appropriate disclosure regime for systemically relevant data.
· Alignment with existing Directives. A number of provisions in the Commission’s proposal do not take into account the highly effective regulatory framework for AIFMs and are inconsistent with existing EU legislation. As a solution, Lombard proposed waiting until the revision process of the existing directives is complete and then proceeding with the AIFMD.
· Third-country issues. Gauzes’s report retains existing private placement regimes to market non-EU AIF to EU institutional investors. However, in Lombard’s view, non-EU AIFMs marketing non-EU AIFs to EU investors face onerous provisions that could lead to non-EU AIFMs being unable to market third-country funds within several Member States.
· New regulatory infrastructure is not yet fully in place. There is a need to wait and see if the new ESMA will be able to carry out all the tasks imposed by the new directive. CESR now counts with 30 people and it will be increased to 80, but will that be enough?
Wolf Klinz (DE/ALDE) began by saying that in order to understand the actual decision- making process and why the Commission is proposing so many reforms in the financial markets, we have to bare in mind that the political pressure has increased considerably due to the crisis. Five years ago Charlie McCreevy supported the minimum regulation in financial markets, but in 2007 he began to pay special attention to financial markets. Klinz said that the AIFMD was introduced at the very last moment by Barroso so as to show that he was still able to lead the next commission. The Commission rushed through it.
He presented the following critical points in the directive and his views thereon:
1) The third-country issue: he said that the European passport is a good idea in principle but when it comes to reality things change because equivalence is not easy to achieve and certainly not in the three-year period proposed by the Commission. He personally thinks that the solution is to introduce the European Passport as proposed and, at the same time, leave the national private regimes so third-country managers can access the European market.
2) As regards the valuation issue, Klinz does not see why an independent valuator would evaluate a fund better than the manager himself. He agrees with the withdrawal of this clause.
3) Leverage. Klinz believes that leverage has to be addressed as there is a need to know how much money the fund has borrowed and on which conditions, so as to control the risk. He mentioned that some hedge funds have asset stripped, mentioning as an example the Frankfurt Stock Exchange. He said this should be controlled and avoided. Not all hedge funds create value for the economy; some even destroy employment.
4) There is an urgent need to coordinate EU policies in financial markets with the US. Klinz mentioned that some of his ‘friends’ in Washington DC are not happy with the fact that the EU is proposing so many pieces of legislation at the same time as the US. It would have liked the EU to go slower and believe that the EU is trying to push the US. Klinz regrets the divergence in accounting standards between the EU and the US.
5) Klinz concluding by saying he is sure that the AIFMD will not need a second reading.
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