LONDON, July 12 Leading fund management firms
have warned the European Commission's head of financial
regulation that new rules aimed at tightening practice at hedge
funds could damage the rest of the industry's ability to operate
Twenty investors, including Allianz, BlackRock, Fidelity and
Schroders, have written to Michel Barnier, the Commissioner in
charge of financial regulation, stating proposed reforms risk
hampering Europe's single market in investment funds.
The letter, seen by Reuters, highlights proposals to ensure
better governance of alternative investment funds by clamping
down on so called "letter box entities" whereby a company is
registered in one jurisdiction but operates elsewhere.
At stake, the fund managers say, is the ability of an asset
manager based in one country to have people based in other
countries making local investment decisions, overseen by locally
based risk management teams.
The fund managers fear that by limiting their ability to
delegate both risk and portfolio management to the markets in
which they are investing, the new rules could cause huge
disruption to their industry.
The letter highlights concerns that the impact of the rules,
crafted to regulate hedge funds and private equity firms, could
spill over into regulation of more conventional mutual funds
sold across Europe known as UCITS.
"We are extremely concerned that the forthcoming 'Level 2'
implementing measures for the Alternative Investment Fund
Managers Directive will undermine the single market," the letter