APPENDIX 3: CALL FOR EVIDENCE
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?
Impact
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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