U.K. pension fund and money management trade organizations on Friday urged European Union officials to amend a proposal that could shut off U.S. hedge fund and private equity managers from the EU market.
Heads of the Investment Management Association, the Alternative Investment Management Association and the National Association of Pension Funds wrote a letter to members of two European committees slated to vote early next week on the Alternative Investment Fund Managers Directive, which will determine how alternative money managers are regulated within the EU.
At issue is an amendment the EU hopes will ensure rigorous regulation of alternatives managers marketing to qualified EU investors, regardless of where the managers are from. However, industry groups say the amendment “in practice, will not provide access for non-EU funds and fund managers, but will instead ban European investors from investing overseas,” the letter said. The leaders of the three groups called the amendment “unworkable.”
The three groups have fought to change this part of the legislation since it was first proposed in April 2009.
If approved, the amendment would reduce choice and “drive down returns for pension funds” and would “provoke retaliatory action in non-EU jurisdictions,” the groups argue.
“Closing Europe’s borders would send all the wrong signals out to the rest of the world about Europe’s place both as a global centre for financial services and as a destination for international investment,” Andrew Baker, CEO of AIMA and one of the letter’s signatories, said Fridayin an AIMA news release. “It would significantly affect international trade and capital flows and result in protectionist consequences.
The letter calls for committee members to support separate amendments that would establish a “passport” system of qualification for non-EU managers to market within the EU, and allow individual EU member states to decide which non-EU funds could be marketed to qualified EU investors.
“It is the only pragmatic and workable solution on the third-country issue,” according to the letter.