.jpg)
Improving transparency and regulatory control of alternative investment funds, such as private equity and hedge funds, to reduce the risks involved, is the key aim of a report tabled in the Economic and Monetary Affairs Committee on Tuesday.
When comes to regulating alternative investment funds (AIF), "no area of the financial sector can escape our attention", said Parliament's rapporteur Jean-Paul Gauzès (EPP, FR), presenting his proposals to the Economic and Monetary Affairs Committee.
The Gauzès report backs a Commission proposal for a directive to ensure that all AIF managers in the EU are subject to supervision, by establishing a binding authorisation and supervisory regime for all entities that deal with managing AIF.
Mr Gauzès nonetheless proposes a series of amendments to various parts of the proposal, ranging from the scope of the directive to new provisions on depositories' liability, leverage limits, valuators, remuneration policy and AIF from non-EU countries.
No exemptions
The Gauzès proposal reduces the exemptions set out in the Commission proposal, removes the investment threshold (the Commission had proposed that only entities managing AIF portfolios with total assets of over €100 million) and replaces it with the proportionality principle, to take account of the size of funds.
All managers of alternative investment funds, including e.g. pension funds, set up and operating in the EU should be subject to a legally-binding authorisation and supervisory regime, which should apply irrespective of the legal domicile of the AIF managed, says the report.
Any AIF manager operating in the EU would also be required to hold and retain a minimum amount of capital which, according to the rapporteur, should correspond to the amounts set by the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive, which aims to ensure that investors receive useful cost and performance disclosures.
Depositories' liability
Depositories' responsibilities must be clearly defined, says the rapporteur, who acknowledges that his proposals here are more stringent than the UCITS Directive, but argues that this is a logical response to the economic and financial crisis.
Leverage, valuators and remuneration policy
Fund managers should describe their leverage policies to the regulator, who should decide whether or not they should be implemented, says Mr Gauzès. He also proposes "more flexible rules" for valuators, adding that further provisions are needed in this context to prevent conflicts of interest.
AIF managers' remuneration should reflect long-term value creation, not excessive risk-taking, says Mr Gauzès.
European passport: don't close the door to non-EU funds
"The EU should not be a fortress" but should remain open to AIF from outside Europe, says Mr Gauzès, who backs the idea of a "European passport" to allow fund managers operating in the EU and funds located in the EU to market funds throughout Europe, provided that EU Member States other than their own are notified of this fact.
To avoid "closing the door" to non-EU funds, Member States should be free to allow them to operate on their territory via their respective national private placement regimes, he adds.
Mr Gauzès would also welcome harmonised rules for private investment, but, accepting that this is currently "not realistic", he proposes transitional periods for introducing such rules.
Further steps
Economic and Monetary Affairs Committee MEPs have until 21 January 2010 to table amendments, which should be debated in committee on 22 February put to a committee vote on 12 April. The plenary vote is scheduled for the July I session.
In the Chair : Sharon BOWLES (ALDE, UK)
