Directive on Alternative Investment Fund Managers - European Union Committee Contents


Call for Evidence

EU Sub-Committee A, chaired by Baroness Cohen of Pimlico, is conducting an Inquiry into the European Commission's proposal for a Directive on Alternative Investment Fund Managers (COM (2009) 217), adopted on 29 April.

This proposal represents the Commission's response to the G20 pledge to regulate unregulated financial markets, including hedge funds and private equity firms. The proposal would create a regulatory regime for investment fund managers managing funds worth more than €100 million. There is currently no specific EU regulatory regime at all for alternative investment funds, although some regulation does occur at both EU and Member State level. The proposal aims to provide a robust and harmonised regulatory regime for the whole single market, creating greater transparency for investors and public authorities and enabling more effective macro-prudential oversight of the sector.

The aim of our inquiry is to provide an opinion on the Commission's Proposal, with a view to informing the debate surrounding the Directive within the UK Government and the EU institutions.

Particular questions raised by the Commission's draft Directive to which we invite you to respond are as follows (there is no need for individual submissions to deal with all of the issues):

All questions refer to the draft of the Directive proposed by the Commission on 29 April 2009.

1. What economic benefits arise from Alternative Investment Funds? What risks to financial markets arise from Alternative Investment Funds? Will the Directive help reduce these risks?

2. To what extent is there a need to create a single regulatory regime for Alternative Investment Fund Managers in the European Union? Does the Directive achieve its objectives? Should the objectives of the Directive be modified?

3. What risks arise from Alternative Investment Funds? Is the Directive proportionate given the role of AIF in the financial crisis? Will the Directive introduce over-stringent regulations or does it not go far enough?

4. Is it appropriate to regulate Investment Fund Managers, rather than the Fund itself? Does the Directive contain appropriate provisions to distinguish between different types of alternative investment? Does the scope of the Directive create a danger of unintended consequences?

5. What is your evaluation of the Commission's consultation in the preparation of the Directive?

Regulatory aspects

6. Will the passport system help create a single market in investments funds within the EU? How will the passport system established affect the EU and the UK industry and particularly their position in the global market?

7. Is the threshold for defining "systemically relevant" Alternative Investment Funds appropriate? Should the Directive include provisions on capital requirement? Does the Directive contain appropriate rules on leverage? Is the requirement for independent valuation agents and depositaries for Alternative Investment Funds adequate?

8. Will the provisions strengthening disclosure requirements help to create a more transparent market or do they go too far?


9. What effect will the Directive have upon the position of the City of London and the EU as a whole as a leading location for Investment Fund Managers? Could it cause many hedge funds to relocate outside of the EU? What impact would the Directive have upon professional investors and institutions?

10. How does the Directive compare to existing or proposed regulation of Alternative Investment Funds outside of the European Union, particularly that of the United States? How will the Directive affect the position of EU Alternative Investment Funds in the global market?

11. What effect will the Directive have on flows of capital and financial innovation?

We also would welcome your views on any other aspect of the Commission's draft directive. Written submissions need not address all questions

Interested parties are invited to submit a concise statement of written evidence to this inquiry by Wednesday 9 September 2009.

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