COMPLINET's Elstob: Caught in the cross-fire - Commission defends AIFMD on two fronts
10 July 2009
France believes that the directive does not go far enough in regulating the alternative investment sector while the UK finds that the AIFMD go far beyond what is needed. The Commission has to deal with both positions.
Both sides in the debate over the draft Alternative Investment Fund Managers Directive aired their arguments, and from their opposing perspectives each had criticisms of the European Commission's approach.
The split is to a large extent along national lines, with the strongest proponents on each side in the UK and France. To oversimplify somewhat, the French sell-side — banks and fund management industry — believe that the directive does not go far enough in regulating the alternative investment sector, which is predominantly based in London, and they are backed in this by the French government.
Asset managers and investors in the UK believe that the French and others, including socialist members of the European Parliament, have exploited post-crisis stability concerns and post-Madoff investor protection fears to push through an essentially euro-protectionist measure which will also damage London, home to the majority of hedge fund, private equity fund, and property fund managers.
A major sticking point for non-UK market participants, particularly the French traditional funds and banks, is the commission's proposal to extend passporting rights to offshore centres such as the Cayman. The majority of both types of fund are, of course, managed in London.
