The European Parliament's adoption of the Alternative Investment Fund Managers (AIFM) Directive signals the end of a long process of making a more workable and practical law than originally proposed, Syed Kamall MEP, European Conservatives and Reformists group lead member on the directive, said today.
Mr Kamall said that the new rules should be welcomed with a degree of caution. They will be costly to Europe's hedge fund and private equity industries but funds will also be able to sell across the EU without the individual scrutiny of every member state, thus strengthening the Single Market.
There has been a concerted effort by left-wing MEPs to create a protectionist directive that would make it almost impossible for non-EU funds to be marketed across the EU without every national government's scrutiny. Fortunately, the proposals adopted today represent a victory for centre and centre-right views.
Mr Kamall said:
"This proposal is not perfect but it is workable.
"This directive could have been disastrous for our financial institutions, pension funds and venture capital investment. Instead, we have a directive that promotes transparency without closing our markets.
"I am not enthusiastic but I do think there is a case for optimism. We need to keep a close watch on the impact on small and medium-sized hedge funds who do not have large compliance operations. We need to scrutinise the powers of ESMA, the EU's new securities watchdog to ensure that it does not block access to funds outside the EU.
"This compromise is not just good for London's financial district but also for the pension funds and entrepreneurial projects, often in developing countries, that would have been affected if we had restricted investment opportunities.
"This directive emerged out of a spiteful effort from Socialist politicians to make hedge funds and private equity a scapegoat for the financial crisis. With a lot of work, we have forged a far more sensible law that reforms the sector without crippling it. Those politicians who wanted to destroy our hedge fund industry have lost."