Date: Tuesday, August 1, 2006
Author: Gordon McAra, AIMA

London 1^st August, AIMA, the global trade organisation for hedge funds today highlighted the implementation of the Capital Requirements Directive (CRD), introduced by the European Union.

The new Directive, based in part on the existing regulatory capital directive, applies to banks, building societies and investment firms, including hedge fund managers. AIMA has assessed that most FSA regulated hedge fund managers will be affected by the new Directive.

Key changes, which will be implemented by 1^st January 2007, include;

·         Changes to the calculation of ‘regulatory capital’

·         Changes to the ‘systems and controls’ governing outsourcing, conflicts of interest etc

·         Existing waivers will cease, so firms will need to reapply for new waivers

·         New reporting arrangements

In addition for firms who operate within a UK or EEA management group, they must meet a group capital requirement for the first time.

Commenting on the new changes, Matthew Jones, Regulatory and Legal Manager said, “The FSA must implement the new Directive into its Rules by 1^st January next year. Hedge fund managers will need to determine their capital requirements and whether there is a need for further monies. Given the scope of the regulations, certain parent companies will also have to consider their capital situation.

Companies with existing capital waivers will also have to consider renewing them or applying for the first time.

Although some changes will not affect managers for twelve months after the rules are implemented, others will have immediate impact and we urge affected hedge funds, if they are uncertain, to take advice.”

AIMA has circulated a Guidance Note on the regulatory changes to all its UK members with further Notes to be issued shortly, which will guide Members through the main issues which the Directive raises. The Note is only available to AIMA members. The note was prepared by the AIMA Regulatory Capital Working Group.

Notes to Editors:

About AIMA

Founded in 1990, AIMA is a not-for-profit global trade association with corporate membership in 46 countries, including over 560 member companies in Europe.  AIMA focuses specifically on hedge funds, managed futures and managed currency funds.  More than 1000 corporate members (comprising 3500 individuals) enable the Association to create global tools for the benefit of its members, institutional investors and regulators. Its objectives are to increase investor education, transparency and promote due diligence and related sound practices, and to work closely with regulators and interested parties in order to promote the responsible use of alternative investments. AIMA’s membership includes fund of funds managers, institutional investors, hedge fund managers, prime brokers, exchanges, fund administrators, auditors, lawyers and other specialist service providers. Please visit us at www.AIMA.org.

For further information, please contact Gordon McAra, AIMA, gmcara@aima.org or tel +44 (0)20 7659 9919 or Eoin Brophy, Hume Brophy Communications on +353 (0) 86851 5477

Gordon McAra 
Head of Communications
The Alternative Investment Management Association Limited (AIMA)
Meadows House,

Mobile: +44 (0)7920 258 102     

gmcara@aima.org

Enhancing understanding, sound practices and industry growth