AIFM directive would restrict global investments - IMA
EUROPE - The UK's IMA has sharpened the debate on the EU's Alternative Investment Fund Managers (AIFM) draft directive and has called for institutional investors to participate in lobbying activity.
According to Jarkko Syyrilä, director of international relations at the IMA, the draft directive would restrict pension fund's alternative investments globally, especially in emerging markets, and must be redrafted.
He also said the scope of the draft directive is too broad and could also affect pooled pension funds.
In particular, Syyrilä pointed out that protectionist aspects of the directive mean delegation of portfolio management would be restricted to other AIFM funds - effectively to EU managers as it is unlikely non-EU firms would achieve equivalent status under the directive in its current form. This would make it difficult to run emerging market, Asia or US strategies if managers could not outsource locally.
Syyrilä said: "Investment is a global business and the directive doesn't recognise that. Emerging markets are clearly the area at stake, but what is the benefit for pension funds in Europe if they can't invest globally? It is limiting the scope of investments pension funds can have and is closing the doors of Europe."
The IMA said "major re-drafting" is needed to avoid unintended consequences, but Syyrilä hinted at further on-going lobby work: "Given the starting point is so bad, there are concerns it will not be a good directive. We will get improvements but will we get enough? There is a lot of work to be done and we need to keep the pressure on."
He argued that the concerns are not limited to the UK, pointing out that other associations, such as the European Fund and Asset Managers Association (EFAMA) and Alternative Investment Management Association (AIMA) have also highlighted potential problems with the new rules. (See earlier IPE article: AIFM could cost pension funds €25bn a year)
Syyrilä said: "This will have a huge impact on the European economy. Why would anyone agree to service US or Middle East funds from Europe? We are calling on pension funds and institutional investors to speak out about whether this is something they want or need, as it is a European problem that will hurt European investors and pension funds."
Earlier this year, pension asset managers such as APG and Shell Asset Management Company in the Netherlands were among 81 private organisations that made submissions to a consultation exercise on hedge funds made by the European Commission's directorate general for the internal market.
The IMA briefing follows the beginning of the discussions on the directive in the European Parliament, where last week Jean-Paul Gauzès, the European People's Party's representative for North Western France, was appointed as the AIFM directive's Rapporteur to guide the directive through Parliament.
In addition, Wolf Klinz (ALDE), Syed Kamall (ECR) and Pascal Canfin (Greens) were named as Shadow Rapporteurs while a fourth Shadow Rapporteur is still to be named. (See earlier IPE article: AIFM depository could increase systemic risk - EFAMA)
It was expected the directive would complete its Parliamentary passage by the end of the year. However, the IMA claimed process is slowing down following a document issued by the Swedish Presidency of the EU last week outlining key issues on the AIFMD, and the beginning of discussions in the Economic and Monetary Affairs Committee (ECON) - where it is estimated by MEPs, including the UK's Peter Skinner, that around 1,000 amendments could be tabled.
And with re-drafting of the directive expected to occur over the autumn, the IMA believes parliamentry approval will not take place until January 2010, with no full ratification expected before summer 2010.
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