15/10/2009 Author: Tony Griffiths

Hedge funds absent from EU AIFM hearing

Hedge fund representation at the upcoming public hearing on Europe’s controversial plans for alternatives regulation looks set to be severely limited, with a single prime broker receiving an invitation to speak on behalf of the sell-side, HFMWeek can exclusively reveal.

The snub suggests that European politicians are continuing to keep the industry at arm’s length, despite widespread and ongoing disapproval of the absence of public consultation in the months leading up to the draft AIFM Directive’s April release.

The two-hour hearing, due to take place in Brussels on 10 November, is a key part of the EU’s legislative process, allowing for public input at a time when the Directive’s Parliamentary representative, rapporteur Jean-Paul Gauzès, is preparing to amend the original document.

HFMWeek has obtained a provisional list of the eight external speakers due to attend and, currently, the hedge fund industry’s sole representative is Anthony Byrne, co-head of Deutsche Bank’s European prime brokerage unit.

Christopher Fawcett, ex-chairman of the Alternative Investment Management Association (Aima) and CEO of fund of hedge funds Fauchier Partners, said the underrepresentation of hedge funds was “unfortunate”.

“We think that best practice is for members of the industry to be represented as much as possible,” he told HFMWeek. “One wants a representation of hedge fund managers and of people who work with institutions in making their allocations to hedge funds.”    

Aima, the hedge fund trade body and long-term Directive lobbyist, has also expressed concern, saying that without hedge funds, those present were “not going to get a full picture”.     

“You’d think that if they’re going to talk about an industry, they may want to hear from the practitioners in that industry,” said Aima chief executive Andrew Baker.

While disappointed, Baker admits that Aima would be more worried were it not for the fact that similar limitations had been imposed on all fund sectors, including private equity.  

“They’ve obviously decided what angles they want to cover and that they feel they’re covering those angles with the people they’ve invited to speak. But if there was to be a future hearing we’d want to get our point of view across,” he added.

Aima is currently compiling a detailed list of practical and beneficial amendments it would like to see at the heart of the redrafted Directive. The trade body hopes to present its recommendations to Gauzès before the rapporteur finishes his report – expected at the end of November.

While the meeting has been officially organised by the Economic and Monetary Affairs (Econ) Committee, with speakers due to address Econ MEPs, the line-up has been decided by a select group of co-ordinators, including Gauzès, from each of the parliamentary groupings within Econ. Council and commission members will be present, with a limited number of seats available to the public. The hearing will be introduced by Econ chairwoman Sharon Bowles.

British MEP Peter Skinner, a member of Econ with the Socialists & Democrats party, says the diminished hedge fund presence should be grounds for neither panic nor optimism, reasoning that the rapporteur could be concentrating on other aspects of fund management. “Which will level out the element of discretion that might be necessary for regulators to look at each fund separately,” he said.

Others invited to give presentations at next month’s event are: Robin Oliver, head of UK compliance at State Street Bank; Janet Williamson, Senior Policy Officer with Trade Union Congress; Markus Miederhoff, General Counsel to Allianz Global Investors; plus representatives of European pension funds Algemene Pensioen Groep and Mn Services; and Members of the International Organisation of Securities Commissions (Iosco) and the Committee of European Securities Regulators (Cesr).