According to Syyrilä, the proposed directive, which is being championed by France and Germany, is much broader in its scope than just hedge funds and private equity firms, and its approach to third country funds is a particular concern.
The UK is one of the few EU member countries to take issue with the directive’s third country funds stance. Non-EU countries, including the US, claim that by effectively excluding non-EU funds, the directive is protectionist legislation in the guise of protecting investors.
"The European Parliament’s ECON Committee is about to take an approach to third country funds which will significantly damage pension savings of all Europeans,” Syyrilä, the IMA’s director of international relations, said.
“European professional investors will only be able to invest in those third country funds whose manager and its regulator [agree] to apply the rules of the directive. It is questionable whether any third country will want to or be able to sign up to these overly burdensome rules.
“Therefore, European professional investors will no more be able to search from among best of breed products globally.”
Vote postponed
Syyrilä made his comments in a speech that kicked off a day-long London event sponsored by the Association of the Luxembourg Fund Industry (Alfi). The event took place less than 24 hours after a vote on the AIFM directive by the European Parliament’s Economic and Monetary Affairs Committee had been postponed to give EU lawmakers more time to fine-tune it and to give Britain time to install a new government. The vote is now expected to take place next week.
Syyrilä noted that although the directive is seen as a hedge fund/private equity directive, “it will complicate and add new burdens to the operations of all non-UCITS fund managers”.
"How will our international trading partners react to this closing of the doors of Europe, and will it lead to retaliation?” he continued.
“The risks are evident and a big question is how will this impact the global distribution opportunities of European funds, including UCITS."
