Money managers under the microscope
It may look like an unlikely scenario on paper, but Europe’s elderly masses could be about to provide the killer blow to draft EU rules to regulate the alternative investment industry.
Hedge fund associations, private equity lobbyists, the British government and even the United States Treasury have waded into the debate over the proposed legislation, seeking to soften an approach which has been labelled an exercise in post-financial crisis political grandstanding, rather than a measured look at how to better regulate the sector.
Now though, the pension funds have entered the stage, and their concerns will be far more likely to win over MEPs across the politcal spectrum.
The giant schemes have pushed more and more retirement money into alternatives as they seek to diversify their portfolios and find the kind of returns that can cushion the effects of pensioners — eventually you and I — living long enough to drain the coffers dry.
By Jason Benham
Glitzy Dubai’s property market is in trouble, there’s no doubt about that. Just take a look at the hundreds of motionless cranes, unfinished projects and the expats who are leaving in droves as they lose their jobs.
And prices and rents which soared during a six-year boom have crashed since late last year. According to one resident who recently moved in the City, it now costs 150,000 dirhams to rent a three-bedroom flat on the Palm, a man-made island off the coast of the emirate, around the same it would have cost to rent a one-bedroom appartment there a year ago.
As you’ve probably noticed, there’s no shortage of regulation in the wake of the biggest financial crisis in 80 years.
IOSCO has been fleshing out pledges made by G20 leaders while the European Commission has put forward its highly-controversial draft law on hedge funds and private equity. Meanwhile the EU is formally reviewing MiFID next year.
After draft laws from the European Commission, which have been attacked by almost the entire UK hedge fund industry, IOSCO‘s proposals — including registration of managers, disclosure of systemically-important information to regulators, registration and supervision of prime brokers — must seem like a walk in the park.
Journalists have not needed to persecute and cajole hedge fund executives into handing over their business cards at GAIM this year, a sharp contrast to conferences in less troubled times.
At past GAIMs, or the Global Alternative Investment Management conferences, certain hedgies went to great lengths to duck journalists, and many even expressed concern or irritation that journalists were allowed in at all.
Growing up can be a painful experience for teeangers with many battles and excesses along the way.
With the finalisation of new EU laws on regulation of hedge funds and private equity likely 6 months away, we should be prepared for an awful lot of hand-wringing and much talk of an industry exodus to lakeside retreats in Switzerland.
The latest word on this is that some managers have warned the Treasury that funds are already looking around for alternative locales where their love of leverage attracts less concern.
In the midst of scarborous political denunciations of the industry and predictions that new regulations could cost UK managers 3 billion pounds we receive some heart-warming news. Hedge funds, according to HFR, have turned it around.
2008 may have been rough as hell, but April 2009 was a banner month. Hedgies exploited volatile energy prices while quants also gained as the industry put up its biggest gain since February 2000 — back when Osama bin Laden was struggling for media attention, oil was at about $20 a barrel and the world lost bluesman Screamin Jay Hawkins.
The horse-trading is over (for now) and the EU has published its draft directive on regulation for the hedge fund and private equity industries. EU commissioner Charlie McCreevy must be doing something right as his plans have angered parties on both sides of the fence.
The Alternative Investment Management Association is furious after claiming political manouevering has riddden roughshod over its own efforts to drive a “proportionate” industry-led solution which promised increased transparency. The Party of European Socialists (PES), meanwhile, appears equally frustrated.
The seemingly endless drama of financial regulation has frequently fixed the spotlight on hedge funds, but there could yet be a twist in the tale.
At a breakfast briefing this morning at the City of London’s plush Capital Club, law firm Katten Muchin Rosenman Cornish suggested the beleaguered hedge fund industry could even benefit from tighter rules.