APPENDIX 4: GLOSSARY
ABI Association for British Insurers
AFG Association Française
de la Gestion financière
AFME Association for Financial Markets
in Europe
AIF Alternative Investment Funds
AIFM Alternative Investment Fund
Mangers
AIMA Alternative Investment Management
Association
APCIMS Association of Private Client Investment
Managers and Stockbrokers
AREF Association of Real Estate
Funds
Arbitrage See regulatory arbitrage
BBA British Bankers' Association
BIS Bank for International Settlements
BVCA British Venture Capital Association
Capital Cash used to generate income through
investing in business or property
CBI Confederation of British Industry
CCBE Council of Bars and Law Societies
of Europe
CEO Chief Executive Officer
CLC City of London Corporation
CRA Charles River Associates
CRD Capital Requirements Directive
Crowded trades when a large number of hedge fund
managers follow similar trading strategies and make similar trades
Depository provides services to AIFMs including
custody services and securities settlements and may also provide
fund administration services
DG Competition Directorate-General for Competition,
European Commission
DG Markt Directorate-General Internal Market
and Services, European Commission
EC European Community
ECB European Central Bank
ECOFIN Economic and Financial Affairs
Council
ECON Committee on Economic and Monetary Affairs
of the European Parliament
EEA European Economic Area
ESRB European Systemic Risk Board
ESRC European Systematic Risk
Council
FEPS Foundation for Progressive European
Studies
FSA Financial Services Authority
FSB Financial Stability Board
FSF Financial Stability Forum
Gauzès report Report prepared by the rapporteur
in the European Parliament on the Directive, published on 27 November
2009
GDP Gross Domestic Product
Gearing See Leverage
G20 Group of Twenty (G-20) Finance Ministers
and Central Bank Governors
Hedge Funds Privately owned investment
companies
IOSCO International Organisation of
Securities Commissions
Leverage The use of debt to supplement
investment
Leverage ratio The ratio of debt to equity
applied by a fund
Liquidity The ability to turn an asset
readily into cash
LTCM Long-Term Capital Management
Macro-prudential risks Risks that affect the
whole financial system
Macro-prudential The analysis of wide economic
trends and imbalances supervision and the detection
of risks that these trends may pose to the
financial system
MAD Market Abuse Directive
MEP Member of the European Parliament
Micro-prudential risks Risks that affect an individual
firm
Micro-prudential The supervision of individual
financial institutions supervision
MiFID Markets in Financial Instruments
Directive
Moral Hazard The incentives for those involved
in financial institutions benefiting from actual or expected government
protection or insurance to behave less carefully (e.g. undertaking
risky investments) just because of the existence of the protection
or insurance
OECD Organisation for Economic Cooperation and
Development
PES Party of the European Socialists
Prime brokers The arms of investment banks and
securities firms who provide services to hedge funds.
Private equity funds Investment companies whose
strategy is to seek ownership or large equity stakes in private
companies
Property fund A collective investment scheme
with a portfolio consisting mainly of direct property but may
also include other property related interests
Regulatory Arbitrage Financial engineering which
exploits the difference between economic and regulatory positions
to avoid unwanted regulation. It can also refer to a financial
institution structuring and locating itself to take advantage
of the least burdensome regulator.
SEC Securities and Exchange Commission
Short selling Selling securities that have been
borrowed from a third party with the intention of buying the identical
assets back at a lower price at a later date to return to the
lender.
Swedish Presidency A document prepared by
the Swedish Presidency issues note highlighting
the issues raised by the Directive
Swedish Presidency A compromise proposal
presented in November 2009 Compromise in attempt
to reach a general approach in the European Council
on the proposal.
Systemic risk The inherent risk of collapse of
an entire system, as opposed to risk carried by any one individual
entity or component of a system.
UCITS Undertakings for Collective Investment
in Transferable Securities. UCITS are retail funds regulated at
EU level which can be freely marketed across Europe to retail
and other investors. Managers of pension funds, national central
banks and non-pooled investments are excluded from the Directive's
scope
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