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Comment: Fighting for a rethink on the AIFM directive

The hedge fund industry has been in the forefront of efforts to persuade the EU authorities to re-examine the draft Directive on Alternative Investment Fund Managers. But, argues Aima chief executive Andrew Baker, it's vital that other economic players, from members of the real estate industry to pension fund trustees, join the campaign to prevent a hastily-drafted piece of legislation damaging Europe's global economic competitiveness.

Although the European Parliament is in recess and the real engagement with Brussels awaits us in September, this period is an important time for our campaign to have the European Commission's draft Directive on Alternative Investment Fund Managers revised.

We continue to construct as broad an alliance as we can among other trade bodies and investors and to stress the wider consequences of the directive in terms of the competitiveness of financial services in the European Union and the desirability of Europe as a destination for international investment.

We are approaching individual member states to explain our position and laying the groundwork for a potential future compromise by underlining that we are happy to accept elements of the directive that are part of the G20 vision, such as manager authorisation and the reporting of systemically relevant data.

The feedback that we have received is that if we can demonstrate that we do not oppose fair regulation but rather have legitimate concerns about the quality of the drafting of the directive, we will have a sympathetic hearing from European policymakers.

We have also discovered that because of a lack of consultation by the Commission, many member states countries have yet to develop a 'house view' and are unaware of the potentially harmful impact of the directive on their own economies. This means that the raising of awareness must extend to the finance ministries of EU member states and not just investors.

We recognise that if the directive is seen solely as a hedge fund industry issue, it will be difficult to make policymakers listen to our concerns. That's why we have been pointing to provisions within the directive whose impact on pensions, commercial real estate and inward capital flows will affect the economy of every member state.

We believe, for example, that commercial real estate markets within the EU could be significantly affected by the directive, which covers real estate funds as well as hedge funds and private equity.

Smaller member states in central and eastern Europe could be particularly badly affected. Real estate consultants in Lithuania, for example, estimate that 95 per cent of major commercial real estate transactions (those above EUR5m) have come from international investment, and that 90 per cent of those investments were made by international real estate funds.

As part of our campaign to raise awareness, we have created a new Directive Centre on our web site, intended as a resource for industry colleagues, journalists and members of the public, and including press releases, guidance notes, FAQs and other Aima resource materials, speeches and articles on the directive, and links to relevant documents, including the Commission's directive and details of its legislative process.

The list of those who have expressed concern about the current form of the directive now includes pension funds and industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity firms, ministers from Sweden and the UK as well as Irish officials, the chairwoman of the European Parliament's economic and monetary affairs committee, the US Treasury, the German funds association, Jacques de Larosière - and even Charlie McCreevy, the European commissioner under whose aegis the directive was drafted. Now is the moment for all other players that may be affected to ensure that their voices, too, are heard in the debate.

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