Some of the UK’s largest hedge funds have warned the Treasury that they will bid farewell to Britain unless the draft EU Alternatives Directive is drastically modified.
Jerome Lussan, managing director of Laven says: “Managers find the proposed Directive restrictive and to be out of touch with industry realities. The Directive would add to the MiFID rules introduced only in 2007, which themselves were poorly implemented. We do believe the new Directive raises some important issues such as disclosure requirements, that should help improve trust and transparency for investors, but to succeed the European Commission must avoid alienating the industry and focus on the practical needs that benefit investors, not politicians.
“The idea of an EU regulator is ambitious but if its foundations are right, it could be the best way for the EU to compete worldwide. However, EU member states are already unable to agree on industry best practices, so it is hard to see political consensus on regulations.”
At a meeting earlier this week, the FSA and the Treasury assured that they would fight for the changes required to keep managers in the country. However, Laven believes the UK’s biggest failure is not introducing laws which enable the establishment of onshore UK-based alternative funds. Lussan says: “These laws exist in France, Luxembourg and Germany for example, so why not the UK? It would be a great opportunity for Britain to grow its hedge fund industry, providing jobs and boosting the UK economy.