The extensive work coming in 2012 on the many detailed measures underpinning the Alternative Investment Fund Managers Directive (AIFMD) will take up much of investment managers time, according to Julie Patterson, director of Authorised Funds and Tax at the UK Investment Management Association (IMA).
Providing its outlook for 2012, the industry body said it is concerned with the raft of regulation facing Europes financial markets and intends to work with the regulators next year to safeguard its members interests. It highlighted AIFMD, MiFID, EMIR, UCITS and Dodd Frank as some of the key regulations it will be focusing on in the New Year.
Commenting further on AIFMD, Patterson said: We expect comprehensive proposals from the European Commission on UCITS, covering a wide range of issues, including the structure of certain exchange-traded products.
On the non-equity markets in relation to MiFID, Jane Lowe, director of Markets, said: On the market side whilst we are happy that the Commission are working on data consolidation in the equity markets, we are perturbed by pre-trade proposals for fixed income and direct markets. These run a very serious risk of undermining market liquidity. Throughout the coming year the IMA will engage closely with EU authorities on this.
Looking at the equity markets, Guy Sears, director of Wholesale, added: The European legislative programme on MiFID may freeze investment in equity trading technologies, as debates occur on the definition and regulation of Organised Trading Facilities (OTFs), such as broking crossing networks.
The inconsistent and overlapping EU regulatory approaches to third country investors and firms could expose the EU to retaliatory legislation from those who are and should remain our main trading partners.
Turning to European capital markets regulation, Jane Lowe said that EMIR, which legislates on OTC Derivatives, will reach a conclusion in 2012 but much of the detail will still need to be worked through. Segregation should operate in all Member States to protect client assets from bankruptcy of clearing members and CCPs. And it is crucial that the European Securities and Markets Authority gets the technical work on collateral quality right. Including clients on clearing house risk committees is another important development.
Looking beyond Europe, Julie Patterson said: Increasingly, we are contending with proposals from the USA that would have detrimental consequences in the UK and elsewhere. We continue to seek workable rules on FATCA in order to prevent a penal 30% tax on any fund invested in US equities. Members are also grappling with the extra territoriality provisions in Dodd Frank on derivatives.
Also emanating from the USA are troublesome proposals under the so-called Volcker Rule that would have major ramifications for fund managers within groups with a US bank and potentially more widely.
(JDC)