AIMA Warns Against the Danger of Extraterritoriality and Regulatory Overlap

The Alternative Investment Management Association (AIMA) has published an enhanced statement of policy principles where it warns against the dangers of extraterritoriality and regulatory overlap.

The principles are set out in a new AIMA paper, “Regulating Capital Markets: AIMA’s Policy Principles”

The paper builds on the AIMA Policy Platform, the landmark 2009 document in which AIMA offered its support for improved transparency, unified global standards, manager authorization and supervision, aggregated short position disclosure to regulators and new policies to reduce settlement failure.

The enhanced principles enshrine AIMA’s core set of beliefs in the broad areas of investor protection, regulatory consistency, systemic risk and market integrity.

On regulatory consistency, AIMA says that policymakers globally should continue to seek a co-ordinated international framework, which preserves the cross-border nature of financial markets.

AIMA’s principles for understanding and mitigating systemic risk include the maintenance of a diversity of market participants and investment strategies and mechanisms to end the problem of “too big to fail”.

The AIMA paper also sets out a number of methods for improving market integrity, including clearly-defined and internationally-harmonized market abuse rules and effective market abuse sanctions.

Kathleen Casey, chair, AIMA, said: “Capital markets are crucial in the financing of the economy and the hedge fund industry plays an ever increasing role in the entire chain of investing and financial intermediation, contributing to market depth, sophistication, transparency and thus its ability to support growth.

“This paper therefore presents an enhanced list of principles which AIMA supports as part of its overall policy on key issues facing the global hedge fund industry and financial markets in general. It endeavors to explain, not only to the official sector but also to the industry as a whole, our core set of beliefs.”