Hedgies meet to plot battle over reforms
HEDGE fund luminaries will assemble this week to discuss ways to combat European Commission (EC) proposals to tighten up regulation of alternative investment firms, City PM can reveal.
In the first of a series of regular meetings, the steering committee, led by industry body the Alternative Investment Management Association (Aima), will discuss aspects of the EC’s draft directive aimed at curbing the activities of hedge funds and private equity.
Man Group, Brevan Howard, BlackRock, Marshall Wace, Lansdowne, CQS, DE Shaw Group, Fauchier and the Hedge Fund Standards Board (HFSB) will be present, with several other firms expected to confirm their attendance in the next few days.
Top of the agenda will be the directive’s proposals to limit the extent to which funds can use leverage. One person familiar with the committee’s concerns said that leverage limits were “extremely worrying”.
“Hedge fund strategies rely on leverage and if we have someone in Brussels setting arbitrary limits, very many strategies could be put in an extremely difficult position,” the source said.
Aima has already heard anecdotal evidence of hedge funds opting not to open in London, where around 80 per cent of Europe’s hedge funds are based, amid uncertainty over the future of “shadow” banking in the EU.
Another issue concerning fund managers is the proposal that EU funds could be barred from receiving the funds of investors outside the EU.
A source close to the steering committee that none of the firms involved wanted to move out of London, but could be forced to do so unless they can secure some changes to the directive.
The EC’s proposals would see fund managers forced to meet more stringent requirements for transparency to both regulators and investors.