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Ninety-four per cent of respondents to a survey conducted by the CFA Institute Centre for Financial Market Integrity support mandatory requirements consistent with the proposed Alternative Investment Fund Managers Directive that managers of alternative investment funds act with honesty and fairness, and with the best interests of investors in mind. The centre supports this notion as a necessary step in addressing issues of trust and the need for a more transparent marketplace.
Eighty per cent of respondents believe that alternative investment fund managers should be mandated to appoint an independent third party for the valuation of assets. The institute says that such a move is important in order to limit the potential for fraud and ensure that investors’ interests in the funds are valued properly.
Fifty-nine per cent of respondents believe that managers of alternative investment funds should be subject to regulatory authorisation when marketing to professional or retail investors. Sixty per cent of respondents feel that different types of funds should be subject to appropriately differentiated rules within the same basic framework.
With regard to access from a third country, seventy-nine per cent feel that managers and funds that are not based in the European Union should be able to market in the EU, provided that the third-country regulatory and supervisory standards applied are at least comparable to the EU. Only two per cent feel that access from a third country should not be allowed. In contrast, CFA Institute members do not believe that regulatory authorities should have full control over alternative investment funds: sixty percent of respondents do not agree that authorities should have the capacity to set limits on levels of leverage used by alternative investment fund managers in their funds.
Sixty-eight per cent disagree with the notion that authorities can place limits on the extent of short-selling activity carried out by alternative investment fund managers.
Charles Cronin, head of the CFA Centre for Financial Market Integrity (Europe, Middle East, and Africa), said: “The CFA Institute Centre does not believe that the Alternative Investment Fund Managers Directive will be detrimental for the alternatives business, just as the ‘non-alternative’ sector operates well under Ucits regulation. Our members have signalled that regulation in this sector is necessary, along with equivalent transparency and disclosure. The Centre also feels it is important to ensure that the system is balanced in favour of client interest and that it addresses the issues of systemic risk to prevent future crises.”