ISSUED BY PETER SKINNER, LABOUR MEP FOR THE SOUTH EAST REGION

 Peter Skinner MEP , 99 Kent Road, Dartford DA1 2AJ

Tel: 01322 270345 , Mobile: 07976 969912

For immediate release                          Wednesday, 26 March 2010

Alternative funds – European exceptionalism could undermine G20 commitments

Moves to go beyond internationally agreed standards for alternative funds could undermine commitments made at the G20 to co-ordinate the global regulatory response to the financial crisis, warns British Labour MEP Peter Skinner.

It also is likely to result in a backlash from the US, harming the interests of EU investors and industry, he adds.

Skinner, a senior member of the European Parliament’s ECON committee, raised his concerns at a press conference on the Alternative Investment Fund Manager’s Directive (AIFMD) attended by leading MEPs from the major UK parties and European Parliament’s rapporteur for AIFMD Jean Paul Gauzes.

“There is a cold draft of protectionism flowing through the European Council that has seeped into parts of the European Parliament’s draft text on AIFMD,” says Skinner, referring to the current proposals on funds and fund managers in third-countries.

“This will not only ultimately harm the interests of EU citizens, but will seriously damage efforts beyond alternative funds to achieve trans-Atlantic – and therefore global – consensus on re-regulating the financial sector,” say Skinner. “It will also lead to retaliatory action from the US, of which we are already seeing some signs,” he adds.

Skinner is specifically concerned over the possibility that AIFMD will either deny funds and fund managers from third-countries such as the US the possibility of marketing across the EU, or set ‘equivalence’ requirements so high on them doing so as to be almost impossible to meet.

“I believe that current efforts by France in the European Council to deny third-country funds the possibility of passporting across the EU are more about protecting and nurturing the French funds industry than doing what’s best for European investors and business,” says Skinner.

“The current Parliament text is a slight improvement since it foresees the granting of passports to third country fund managers who meet equivalence, however the great concern I have is that equivalence will be interpreted as having to follow the letter of AIFMD, rather than the spirit.”

“The purpose of AIFMD ultimately is monitor and reduce the systemic risk posed by alternative funds, and increase investor protection. International standards, such as those being proposed by IOSCO, achieve these goals. So if a third-country meets IOSCO standards it should be declared as having equivalence with the EU and funds and managers domiciled in that third-country the option to passport across the EU.”

“I am far from being alone among MEPs in holding these views. Over the coming weeks we intend to put pressure on the rapporteur to take a more open and reasonable approach on the issue of third countries, for the benefit of all European citizens,” says Skinner.

ENDS

My amendments focused on four main areas: 1) ensuring that investment trusts, which have operated for over 100 years and do not present systemic risk, are not needlessly regulated out of existence by the new law; 2) that European fund managers are not prevented from providing services outside of the EU; 3) that there are extra protections for investors by clarifying the split between depositories and fund managers; and 4) developing the concept of proportionality so that smaller funds are not overly burdened by red-tape and restrictions.

The ECON committee will begin the debate over which amendments will be included in the final parliamentary report with the rapporteur Jean-Paul Gauzès (pictured above) on 23rd February. With so many amendments to discuss, it could be a long process.