Devilsome detail

2 April 2012 By Neil Unmack Follow @unmack1

The latest version of Brussels’ alternative investment directive may lift the bar for regulating managers hoping to raise funds in Europe. That could limit investors’ choice, hurt managers based outside the EU and revive a transatlantic row that was buried two years ago.

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The European Commission’s latest draft text for the implementation of its Alternative Investment Fund Managers Directive has drawn criticism from the hedge fund industry amid concerns that it could limit the ability of foreign managers to raise funds in Europe.

Foreign regulators may not want to sign up to so-called cooperation agreements with EU regulators if the terms imposed by the directive are too tough, according to the Alternative Investment Management Association, a body that represents hedge funds. The directive allows foreign fund managers to market funds in Europe, provided that “appropriate cooperation agreements for the purpose of systemic risk oversight” are in place between EU and foreign regulators.

“The Commission is contemplating a requirement that EU and non-EU regulators sign cooperation agreements which are legally binding on both parties,” said Andrew Baker, chief executive officer of AIMA in a statement. “These would be extremely problematic if not impossible to conclude if the Regulation prescribes that the cooperation agreements ensure that third country regulators enforce EU law in their territories. It could be extremely difficult for many regulators to be able to sign up to that.”

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