Investment funds update

Update at a glance including Alternative Investment Fund Managers Directive, Hedge Fund Standards Board and RDR platform proposals.

• Alternative Investment Fund Managers ("AIFM") Directive
• Hedge Funds Standards Board - Launch of Investor Chapter
• The IMA says that the FSA should consider unforeseen consequences of RDR platform proposals
• IMA responds to Treasury consultation paper: 'Special administration regime for investment banks'
• European Commission publishes responses to consultation on corporate governance in financial institutions and remuneration policies
• FSA consults on reforms to platform regulation
• Herbert Smith Financial Services Regulatory Update

1. Alternative Investment Fund Managers ("AIFM") Directive

After 18 months of extensive negotiations, the controversial AIFM Directive was adopted on 11 November 2010 by the European Parliament. The Directive applies to AIFMs established in the EU which manage one or more alternative investment funds ("AIFs") irrespective of where the AIFs are located, whether or not they are listed or what legal form the AIF takes. The Directive also applies to AIFMs established outside the EU which manage one or more AIF established in the EU or which market one or more (EU or non-EU) AIF within the EU.

Please click here for our bulletin on this. A full briefing will be published shortly.

2. Hedge Funds Standards Board - Launch of Investor Chapter

On 17 November 2010, the Hedge Fund Standards Board (HFSB) published a press release announcing the launch of an investor chapter.

The aim of the chapter is to strengthen the role and influence of investors in the HFSB's standard-setting process. The chapter comprises 30 investors from Europe, Asia and North America, including pension schemes, fund of funds managers and a sovereign wealth fund.

More information about the investor chapter, including an application form, is available on the HFSB website.

For more information on the HFSB's standards, see Practice note, Hot topics: Hedge funds: HFSB Standards.

3. The IMA says that the FSA should consider unforeseen consequences of RDR platform proposals

Responding to the publication of the FSA’s platform proposals, the Investment Management Association supports the aim of a transparent retail market, but asks the FSA to consider the unforeseen consequences of the Retail Distribution Review platform proposals.

Richard Saunders, Chief Executive at the IMA, commented:

“The IMA continues to support the FSA’s aim of a more transparent retail market that works in the interests of investors rather than providers and distributors. But these proposals will in effect allow product providers and distributors to facilitate adviser charging in some circumstances but not others. This will undoubtedly shift the balance of competitive advantage between different players, but in ways that are not predictable at this stage."

“There is a risk that the market may not evolve in the benign direction that the FSA seeks. We therefore call upon the FSA to consider carefully the unforeseen consequences of the Retail Distribution Review platform proposals, for example higher taxes and aggregate costs to consumers, before they finalise the proposed rules.”

Please click here for the FSA’s press release and herefor the Consultation Paper.

Please click here for our full bulletin on the FSA consultation.

4. IMA responds to Treasury consultation paper: 'Special administration regime for investment banks'

The Investment Management Association's response to the Treasury consultation paper: 'Special administration regime for investment banks' has been published.

Please click here for access to the response.

5. European Commission publishes responses to consultation on corporate governance in financial institutions and remuneration policies

The European Commission has published responses to its consultation on corporate governance in financial institutions and remuneration policies. The responses come from a number of public authorities and other organisations and include:

• The UK Government response
• The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS)

6. FSA consults on reforms to platform regulation

The FSA has published a long-awaited Consultation Paper seeking industry views on changes to the regulation of platforms. The reforms seek to ensure that platform services do not undermine the objectives of the FSA's Retail Distribution Review (RDR) (particularly the new rules on adviser charging), and to address other issues identified through thematic and supervisory work.

Please click here for access to our e-bulletin on the Consultation Paper. A more detailed briefing will be published in due course.

7. Herbert Smith Financial Services Regulatory Update

Please click here for the HS Financial Services weekly update for the week ending 12 November 2010.