No rush to comply with new EU alternatives regulations

Investors are not pushing for their money managers to become compliant with new rules that will regulate hedge funds and other private funds for the first time, despite the regulations that came into force in July.

Money managers responding to a survey conducted at a Dec. 11 seminar by Northern Trust do not expect their clients to be engaging with them over the Alternative Investment Fund Managers Directive by the end of 2015.

The AIFMD, a European law that had to be adopted by individual countries before July 2013, for the first time regulates hedge funds and other private funds. It became European law in July 2011. The European Commission proposed its first draft in April 2009.

Compliance dates across Europe vary, with the U.K.'s date set at July 2015, giving managers a one-year transition period.

However, the survey of 50 attendees, including C-level and other senior executives from money managers, pension funds and consultants, conducted at the seminar held in London, found that more than half of respondents think investors will not be working with managers by 2015. In a 2012 survey, almost 70% of respondents said their investors were not engaged in AIFMD planning.

The directive creates a pan-European passport that makes it easier for managers to distribute their products into other markets. The survey found that fewer than 15% of respondents see the directive as strategically important for their business, while 66% see it as a compliance exercise over any opportunity.

“Next year is an important milestone in AIFMD deployment,” said Ian Headon, senior vice president, Europe, the Middle East and Africa of Northern Trust depository services. “The fact that managers still feel that investors, the intended beneficiaries of the directive, will not be engaged in December 2015 comes as somewhat of a surprise.”