“Hedge funds and private equity are important parts of the financial system; however, in certain circumstances they can act collectively in a systemic way. Therefore, there is a need to regulate them”, he said in London earlier this week.
The AIFMD is seeking to achieve three major objectives:
· Ensure that supervisors have the information they need to detect and respond to systemic risks
· Put in place robust investor safeguards
· Build a real single market in alternative investments. There are important barriers to efficient cross-border placement of these funds. A harmonised regime will cut through these barriers, creating new opportunities for the industry and investors. Barnier says he is sure the City does not need to be convinced of the merits of the single market. He wants to be Commissioner for more - not less - internal markets,.
He made clear that he fully supports these objectives. There is also growing consensus about the structure of the Directive and many of its core provisions.
However, he said that there are two areas which require particular attention:
· First, it is vital that we take account of the objective differences between business models.
Hedge funds and private equity are not the same. We need flexibility in the way that specific rules are applied. For instance, this applies to risk management, valuation and depositary functions. The Commission proposal recognised this but we can certainly go further
· Second, we need to think carefully about the treatment of funds and managers established outside the European Union.
This is a global industry. Access to overseas investment opportunities allows European investors to diversify their portfolios.
He concluded by saying that “The time has come to agree a good and sound AIFM directive. I want an outcome that benefits the European industry, rebuilds investor confidence and enhances economic growth. The final Directive has to be intelligent and efficient. We are not there yet. I can assure you that the Commission will play a constructive role in the negotiations to ensure that the right balance is struck.”
© European Commission
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