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WELCOME to HEDGELINE  -  a publication dedicated exclusively to hedge fund regulation. Each month we provide a summary of the major legal and regulatory changes affecting hedge funds, both in Europe and key offshore jurisdictions. For those who want to read in more depth, we provide links to relevant legislation and other materials.  

Look closer

In this month’s update:

  • AIFM Directive dangerous for EU and UK economies, say Lords 
  • "Short-selling disclosure rules will hit equity markets" says fund association 
  • Assumptions about benefits of financial activity "need to be challenged" says FSA chief 
  • FSA time-limit changes "unnecessary and perplexing" says FSI lawyer  

AIFM DIRECTIVE DANGEROUS FOR EU AND UK ECONOMIES, SAY LORDS 

In brief
  • "Directive will hit UK and EU economies" peers argue   
  • Greater differentiation between funds required 
  • New rules should be in line with US

The Directive on Alternative Investment Funds, as currently drafted, will have a damaging effect on the UK and EU hedge fund industries and should not be supported by the UK government, a House of Lords Committee has said.  More

"SHORT-SELLING DISCLOSURE RULES WILL HIT EQUITY MARKETS" SAYS FUND ASSOCIATION  

In brief
  • Public SSDR reduces liquidity 
  • Bid-ask spreads, price discovery improved where requirements don't apply  

Public short-selling disclosure requirements (“public SSDR”) will reduce short-selling in the equity markets and have “detrimental impacts” upon them by withdrawing valuable liquidity, according to a report sponsored by the Managed Funds Association.  More

ASSUMPTIONS ABOUT BENEFITS OF FINANCIAL ACTIVITY "NEED TO BE CHALLENGED" SAYS FSA CHIEF

In brief
  • Increased financial activity no intrinsic benefit to economy, says Turner
  • New macro-economic tools might find favour 
  • Transaction tax should be considered 

A consensus that supports unlimited growth in the financial markets is based “more on ideology than on firm evidence,” FSA chairman Adair Turner argued in a speech made on 15th February.  More

FSA TIME-LIMIT CHANGES "UNNECESSARY AND PERPLEXING", SAYS FSI LAWYER

In brief
  • FSA seeks time-limit changes to reflect enforcement shift
  • But changed arguably surplus to requirements 
  • FSA action should be "contemporaneous" and evidence "fresh" 

The UK’s recently-published Financial Services Bill includes amongst its many aspects a provision which would amend time-limits in respect of actions that the Financial Services Authority can bring against individuals.  More

  

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FSI is a well known law firm with specialist expertise in relation to enquiries and investigations instigated by the FSA and overseas regulators, including AMF in France and the SEC in the US.  Often working in conjunction with compliance specialists and other professional advisers, the team will attend interviews at the FSA, advise on all correspondence with the FSA and represent their clients before the Regulatory Decisions Committee and the Financial Services Markets Tribunal. For further information on how we might be able to help you, please contact head of team, Philip Rubens:

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