AIMA has issued a warning to hedge fund managers not to drag their feet on implementing the Markets in Financial Instruments Directive (MiFID).
MiFID, which is due to be implemented in November 2007, will have a significant impact on hedge fund managers across the European Economic Area. AIMA (the Alternative Investment Management Association) warns that the volume and complexity of the new directive, in addition to a lack of some final information will leave such managers and other regulated entities facing a very tight implementation schedule.
Matthew Jones, Regulatory and Legal Manager at AIMA said: 'Hedge fund managers need to start working on MIFID now. Although an 18 month run up period sounds adequate, experience shows, particularly after the experiences of N2 and A-Day, that there is an instinct to leave serious implementation work to the last possible minute. Realistically this will not be possible with the new Directive. It has the potential to have a major impact on our members' business structures, systems and documentation.'
Added to that is a further heavy workload with the likelihood of the FSA in the UK introducing a single set of Conduct of Business rules, even for regulated firms that are outside the scope of MiFID.
While AIMA has produced, for its members, an in-depth Preliminary Guidance 'Matrix' on how to prepare for the Directive, non-AIMA members will have to go through a steep learning curve and seek their own interpretation of the new arrangements.
Jones added: 'There are finite industry resources to carry out all the likely legal and structural work involved and these will become progressively scarcer as the industry approaches the November 2007 deadline. In the worst case scenario, a hedge fund manager that does not have its arrangements in place by then may have to cease trading until they are MiFID compliant.'