EU draft hedge fund directive needs rewrite-AIMA

Date: Monday, May 25, 2009
Author: Reuters.com

*Draft directive potentially ambiguous

* Implementation could be unworkable

* Could conflict with existing financial services directives

LONDON, May 22 (Reuters) - The European Commission's draft directive on hedge fund regulation is potentially ambiguous and needs to be rewritten, an industry body said on Friday.

"The particular problem with the draft directive ... is that it is written in such an unclear way that it is open to ambiguous interpretation," said the Alternative Investment Management Association (AIMA).

"Implementation in its current form could prove to be unworkable. It also appears to be in conflict with existing financial services directives," said the AIMA, which represents more than 1,200 hedge fund firms worldwide.

The industry group has already attacked the EU's regulatory drive and said last month it was frustrated by the "baffling" volume of political rhetoric relating to hedge funds. [ID:nLN650946]

The European Commission's proposals would make it mandatory for hedge funds to register and disclose information on leverage to supervisors if they want to operate in the European Union. [ID:nBRU007389]

The AIMA said it would oppose all measures it believes would be punitive, would reduce competitiveness and would increase unemployment. "It is extraordinary that at a time of economic crisis the Commission is contemplating putting jobs at risk and hitting investors and thus investment," it said.

"Much of the directive is unnecessary and by creating an extra layer of bureaucracy imposes significant burdens and costs without adding value." (Reporting by Raji Menon; Editing by David Holmes)