EU directive divides industry

Industry bodies are at odds over the European Commission's new directive on alternative investment fund managers.

Released last week, the directive called for the authorisation of alternative managers and the creation of a comprehensive framework for the direct regulation and supervision of the industry.

Under the new proposals, all managers with a portfolio of more than €100m (£89m) will be subject to "harmonised regulatory standards" on an ongoing basis.

Further, the directive would allow fund managers to distribute non-Ucits funds to professional investors in EU member states. Currently, cross-border fund distribution in EU countries is limited to Ucits funds only.

The commission said the directive would enable EU member states to improve the "macro-prudential oversight" of the sector, as well as take coordinated action as needed to ensure the proper functioning of financial markets.

It said it would also help to overcome gaps and inconsistencies in existing regulatory frameworks at the national level.

The directive was welcomed by the IMA, with Jarkko Syyrilä, director of international relations, lauding the possibility of a more open market and greater choice for Europe's professional investors.

But he did say the directive needed to be executed quickly.

"Waiting another three years until third-country funds can be distributed in Europe is too long," he said. "European investment funds are marketed around the globe with remarkable success.

"We are fully convinced open markets will be of benefit to Europe. The IMA will be engaging with all the relevant authorities to discuss the draft directive in further detail."

For its part, the Alternative Investment Management Association blasted the directive, claiming its formulation had been rushed.

Florence Lombard, executive director, said the directive was "hastily prepared and without consultation". She also argued that the directive contained many "ill-considered" provisions that were "impractical" and may prove "unworkable".

Ms Lombard took pains to emphasise that Aima "understood" the great deal of political pressure facing the Commission.

"However," she added, "it is the Commission's role to propose necessary, unbiased and effective legislation. This directive is punitive and falls far short of this goal.

"It also does not recognise or take into account the existing progressive and effective regulatory framework in some EU states."