08/02/2012 Author: Tony Griffiths

Aima voices hedge fund concerns over Mifid II draft

The Alternative Investment Management Association (Aima), the global trade body, has aired its first public concerns about the update of Europe’s Markets in Financial Instruments Directive (Mifid), singling out the draft’s approach to third-countries as a particular worry.

Mifid II, a revision of 2004’s Mifid legislation, is considered one of the EU’s most important pieces of financial legislation, covering many services and instruments utilised by hedge fund managers.

Speaking exclusively to HFMWeek, Aima’s director of government and regulatory affairs, Jiri Krol, described the draft proposals as a mixed bag. “The most worrying proposals are around thirds countries, particularly the need to register with Esma if you wish to trade with European eligible counterparties,” he said.

“It’s another element in a long line of quite unfortunate third-country regulatory proposals. This could make life difficult for all market participants, not just investment managers,” he added.  

According to Krol, other improvements required include a narrowing of the definition of algorithmic trading – subject under Mifid II to some potentially onerous disclosure requirements – so as not to capture all computer-assisted trading. Krol’s comments add to growing dismay with the legislation’s first draft.

“The third-country provisions are pretty controversial,” said Leonard Ng, a partner at law firm Sidley Austin.

Such requirements could be worse than the equivalent rules in the Alternative Investment Fund Managers Directive (AIFMD), Ng added.