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EU Directive would curtail access to European market for Canadian and other international fund manag

Date: Thursday, April 22, 2010
Author: AIMA Canada

The Alternative Investment Management Association – Canada Inc. (AIMA Canada) has expressed concern about the potential effects of the European Commission’s current draft Directive to regulate alternative fund managers operating in the European Union (EU).

The European proposal would force hedge funds to comply with a range of requirements that would effectively prevent non-EU managers such as Canadian hedge funds from attracting capital within the EU.
The Directive, which has been under development for the past year in the wake of the global financial crisis, has stirred considerable debate among EU countries and raised concerns in the international financial community. The EU measure goes much further than pledges previously agreed to by G20 member countries and, if adopted, could result in counter measures from other countries.

AIMA Canada Chairman Gary Ostoich said: ―In its current form the Directive will significantly restrict the ability of alternative fund managers from non-EU countries such as Canada to do business and raise capital in the EU, as well as having negative effects on the ability of institutional investors in the EU to access investment management expertise outside the EU.
Canadian alternative investment managers have traditionally looked to the EU as an important source of capital, and the implementation of the current directive would not only have a material effect on the growth of the Canadian alternative industry going forward but also force funds to essentially remove existing current EU clients from their funds, noted Mr. Ostoich.

We are hopeful that our input, and that of other international stakeholders, will result in the development of a sensible consensus agreement on revisions to the Directive that will allay legitimate concerns related to the current draft,‖ he said.

Mr Ostoich said that AIMA ―welcomes the parts of the Directive which relate to the G20 process, such as the reporting of systemically relevant data by managers to their national supervisors in the interests of financial stability, and the registration and authorization of managers.
However, AIMA believes that there are other elements of the Directive — such as those relating to depositaries and marketing among others — which, as currently drafted, will have many unintended and potentially damaging consequences.

AIMA believes the Directive should focus on three key issues of: registration and authorization; reporting on systemically relevant data; and a workable passport. This would create a progressive operating framework for the industry within the EU that would address concerns relating to systemic risk,‖ he said.

About the Alternative Investment Management Association (AIMA)
Celebrating its 20th anniversary in 2010, AIMA, the Alternative Investment Management Association, is the hedge fund industry's global, not-for-profit trade association with over 1,100 corporate members (with over 4,500 individual contacts) worldwide.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services, fund administrators and independent fund directors. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators.
AIMA is a dynamic organization that reflects its membership’s interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards, and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialized educational standard for alternative investment specialists.
AIMA Canada was formed in March 2003 to act as the voice of the alternative investment industry in Canada. AIMA Canada now has over 65 corporate members.

Additional information on AIMA Canada is available at www.aima-canada.org.