Alternative investment fund managers (debate) 
President
The next item is the report by Jean-Paul Gauzès, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a directive of the European Parliament and of the Council on Alternative investment fund managers and amending Directives 2004/39/EC and 2009/.../EC - C7-0040/2009 -.
Jean-Paul Gauzès
Mr President, Mr Reynders, Commissioner, the text we are debating this evening, and which will be put to the vote in Parliament tomorrow, is the result of a long period of work. On 30 April 2009, the European Commission published its proposal for a directive on alternative investment fund managers. It aims to establish a safe, harmonised framework at European Union level to monitor and supervise the risks presented by managers for their investors, their counterparties, other actors in the financial markets and financial stability, while making it possible for managers, subject to observing strict requirements, to provide services and market their funds throughout the internal market.
Mr President, may I just pause a moment, I wanted to know whether, given the length of our work, I had no time limit, because I see that the clock has not started. It does not bother me but, for honesty's sake, I wanted to draw it to your attention.
Parliament received the text about 14 months ago. It has aroused obvious interest among Members of the European Parliament, as a record number of 1 690 amendments have been tabled. Professionals have been involved very extensively and the rapporteur has had nearly 200 discussions on this text, not counting the discussions with national authorities.
Finalising the compromise text that is being debated today has been particularly hard work. Half a dozen informal trialogues took place under the Spanish Presidency during the first half of 2010 in order to facilitate the exchange of information on the progress of the work. No agreement was reached in the Council during this period.
On 17 May 2010, the Committee on Economic and Monetary Affairs, by a large majority, voted in favour of the report, which was the result of collective deliberation by Members of the European Parliament. Parliament introduced proportionality, differing rules for different categories of funds, regulation to protect the private equity of target companies and jobs and a passport system for funds and alternative investment fund managers based outside of the European Union.
There then followed a dozen trialogues. A working party was also set up between the three institutions specifically to deal with the technical aspects of the proposal in a number of meetings with the Belgian Presidency and the Commission.
On 26 October 2010, the trialogue, which was to become conclusive, was held, with the active participation of the President of ECOFIN, Mr Reynders, and of Commissioner Barnier, and an agreement was reached on a compromise text which the rapporteur felt could be put to the vote in Parliament.
I shall not go into the detail of this lengthy technical document but will highlight the essential points. The directive will make it obligatory for alternative investment fund managers located in the European Union to be authorised or registered, and to comply with operational and organisational requirements, codes of conduct and transparency rules, and will make them subject to the power of the competent authorities of the Member States and of the European Securities and Markets Authority (ESMA) to supervise and to impose sanctions.
It will give them access to the Union's internal market by means of an intra-European passport to manage and market their products. Eventually, managers based outside of the European Union will be able to qualify for a passport provided they meet the same requirements as managers whose head office is in the European Union. The number of meetings and the intensity of exchanges and negotiations between the rapporteur, the shadow rapporteurs, the Presidency at the time and the Commission have very significantly enriched the initial proposal in a number of areas.
In this respect, I need to make it clear that the progress sought by Parliament was achieved gradually in the course of negotiations and not, of course, only in the last trialogue during which some adjustments were made, but at the political level, it was decisive.
I would now like to emphasise the areas in which Parliament's intervention has been decisive. First of all, on two highly political issues, with regard to relations with third countries, the existence and implementation of a passport - well, now I really do not understand because normally I have four minutes - for managers residing outside of the European Union have been approved. Specific conditions for the granting of a passport have been laid down. With regard to private equity, Parliament has succeeded in ensuring that the directive includes provisions to avoid potential asset stripping of the target company and also specific rules concerning reporting obligations in relation to target companies, their employees or their representatives.
Given the erratic behaviour of the clock, I shall not go back over some of the provisions that were achieved in accordance with Parliament's wishes. I shall simply say that Parliament would have liked to have gone further, but it was able to influence negotiations so as to give more recognition to the ESMA's role. The solutions that were upheld nonetheless constitute significant progress towards improving monitoring at European level. Parliament has been careful to strengthen the powers of the Council and of Parliament in the process of adopting acts delegated by the Commission.
A majority in Parliament would have liked very strict control over passive marketing, or even its prohibition. The inclusion in a recital of the principle whereby professional investors have to carry out due diligence when they invest in funds located outside of the European Union constitutes a significant first step.
That, Mr President, Mr Reynders, Commissioner, is what I wanted to say in opening the debate. In closing, I shall take this opportunity of two minutes to thank all those who have contributed to this success.
(Applause)
President
Mr Gauzès, you can have as long as you like if you protect the interests of the City of London.
Didier Reynders
Mr President, Mr Gauzès, ladies and gentlemen, it is again a pleasure for me to come before you once more as you debate an additional part of the reform package that we want to introduce in the financial sector. The report that has been submitted to you forms part of the supervision package which, as you know, had already been adopted unanimously in the Council.
Once again, with regard to investment funds, we have gone forward with the same unanimity in the Council, and you adopted the supervision package by a very large majority. I hope that we will be able to see just as large a majority come out for the section on investment funds.
For the first time, this directive introduces European regulation affecting managers of alternative investment funds, above all, hedge funds and private equity companies, which we have discussed many times. These companies, which benefit the European economy, have, until now, not been subject to any supervision or specific regulations at European level. The present proposal fully meets the wish of Commissioner Barnier - which is also my wish - to extend effective, appropriate regulation and supervision to all actors and financial activities which present significant risks.
With this directive, Europe is taking one more step towards the full implementation of the decisions taken at the G20. On the eve of the G20 summit, this is a strong signal from Europe to the rest of the world. As I said, this text is fully integrated into the new European supervision framework, strengthening the role that ESMA will play in regulating alternative fund managers.
Thanks to what I hope will be your vote in favour, the managers of these funds will be subject to consistent and largely new rules with a view to increasing transparency as regards supervisors, investors, companies and workers of the companies acquired by some of these funds. Private equity companies will have to give notification of their presence in the companies acquired and provide information to employees, in particular, concerning their future strategy for the business and the potential repercussions for jobs. The directive also aims to increase protection for investors. For example, the function of depositary will be strengthened considerably, and so will risk management. Leverage, the remuneration method and delegation will now be monitored.
The directive also aims to enhance the internal market in this sector, in particular, by introducing an intra-European passport which will facilitate cross-border transactions, benefiting the economy as a whole. A passport for third countries will also be introduced in order to maintain a level playing field internationally, respecting the principle of 'same rights, same obligations'. I am pleased at the truly European character of this directive, which guarantees a high level of protection and transparency while continuing to encourage investment in Europe. The passport system, which is based on strict controls and gives European supervision authorities a central role, constitutes a reliable and effective regulatory basis for a sector whose anticipated role in the recovery of growth cannot be underestimated.
Like the other elements of the reform programme for the financial sector, the directive also aims, on a more global level, to prevent, or at least limit, the scale of further financial crises. I want to make it clear that the agreement between Parliament and the Council, which I hope is as broad as possible, owes much to the determination of the European Parliament, and particularly that of its rapporteur, Mr Gauzès, and to the in-depth work that they have accomplished.
Mr Gauzès, I want to thank you for your resolve, your commitment and your determination, without which the European Parliament's adoption of the directive probably would not have been possible.
Mr President, I would also like to thank Ms Sharon Bowles, Chair of the Committee on Economic and Monetary Affairs. We had many discussions in trialogue meetings and other fora about this directive, and also about other texts. It was useful as it proved that it is possible to have a codecision process on one condition, namely, that it is possible to start negotiations at the same time, with the Council on one side and Parliament on the other. Thank you very much for your ability to organise that in Parliament. It is not easy in the Council, and I am sure it is not always easy either with all the Members of Parliament.
(FR) Finally, Mr President, I would like to thank the Swedish and Spanish Presidencies, as well as Commissioner Barnier, who has just joined us, and all of the shadow rapporteurs, Mr Goebbels, Mr Klinz, Mr Canfin, Mr Kamall and finally Mr Lehne, for the fruitful and clearly constructive exchanges that we have had on the amended report, which will be put to your vote.
From now on, Mr President, there will be a reliable and harmonised framework at European Union level for controlling and supervising the risks that alternative investment fund managers pose to their investors and to financial stability. I am convinced that the will to achieve results which has inspired us will continue to stimulate negotiations on future texts. Every time I come to your House, Mr President, I thank you for the work that we have just accomplished, but I would like to thank you now already for the work that we are going to accomplish in the coming weeks.
Mr Gauzès, I hope that we will be able to work together at this same pace towards an agreement on the subject of credit rating agencies. On behalf of my successors to the Presidency of the Council, and in view of recent negotiations, I am furthermore confident that we will make progress on this subject, but perhaps also on others in the future. The date has already been set. In any case, thank you for the work that has been done on this report.
(Applause)
Michel Barnier
Mr President, the first thing I will do is ask you to excuse me, ladies and gentlemen, for joining you a few minutes late.
The Belgian Presidency is so dynamic that, at the same time that this important debate is taking place here, the debate on this directive on alternative investment fund managers, we are having a debate in the Competitiveness Council on another important subject, the European patent, and so I have only just left the Council to come back here - I do not yet know in what condition, but I will do what I can. I cannot split myself in two.
Mr Gauzès, whose convictions I know but whom I was not able to listen to, will certainly excuse me. I would like to thank and congratulate him, as well as all the coordinators and shadow rapporteurs, and of course, as Mr Reynders has just said, the Belgian Presidency and the whole team, for the very important and very tenacious work that has been accomplished over these last few weeks, and before it, by the other Presidencies.
We have now been debating this subject for almost 15 or 18 months, and, with Parliament's vote, we are very close to putting this reasonable agreement into effect. Parliament is meeting today to debate it and will meet tomorrow to make a decision on it. This vote in plenary, ladies and gentlemen, will take place on the eve of the G20 summit in Seoul, and this represents a great opportunity to demonstrate our ability to act together, to implement common objectives and also to implement the decisions taken just after the crisis - and that crisis is not yet over with regard to its financial, economic, human and social consequences - decisions which were taken at the highest international level, at the G20.
Following the agreement on the supervision package, which we also owe to the commitment of Parliament and the tenacity of the Belgian Presidency, the agreement on this directive on alternative investment fund managers needs to demonstrate this ability to learn the lessons of the crisis, to establish intelligent regulations and effective supervision where they need to be established, such that all financial actors are subject to these regulations and this supervision, which are both robust and effective.
The Member States have agreed unanimously to this last proposal, as Mr Reynders has said. Ladies and gentlemen, I want to say what I think: this agreement would not have been possible without the contribution of Parliament, which has significantly improved the proposals that we are debating.
Thanks to the determination of Mr Gauzès and the shadow rapporteurs, today, the report contains many new elements relating to the report adopted initially in May by the ECOFIN Council, and these contributions from Parliament improve the quality of this proposal for a directive in a very real sense. I would like to mention, one by one, some elements that we believe to be positive and of a high quality.
The first element is the strengthening of the rules on private equity, which will increase the transparency of these activities in relation to employees of the companies targeted, and will introduce robust safeguards against asset stripping, as many of you wished, although I know that some of you think that this does not go far enough.
The second element is a truly European solution for third countries. This solution, based on the 'same rights, same obligations' approach, has always been supported by the Commission, and it will eventually guarantee that all managers active in Europe will be made to respect European rules.
The third element is the key role for ESMA envisaged in this provision, which will make the supervision of managers more consistent and will enhance the functioning of European and third-country passports.
The fourth element is strong supplementary rules which will protect investors and the markets. In this regard, I would like to mention the limits on leverage, additional capital, professional insurance for managers and the rules on the role and responsibility of depositaries.
Ladies and gentlemen, the Commission shares your concern about the lack of rules concerning passive marketing. This lacuna could end up being a way of bypassing our rules, and that is why we have the same concern.
However, the Member States are almost unanimously opposed to any rules in this area, and we are ready, in a spirit of compromise, to accept the current report, on condition that this matter is reviewed, and eventually within the context of the directive, and we will ensure that this happens.
On behalf of the Commission, I would once again like to thank Parliament for its crucial cooperation and its contribution to this report, and I hope, like Mr Reynders, that we will be able to reach an agreement which is as broad as possible on this compromise, which, in our view, remains a dynamic compromise, and which enables us to maintain one of the commitments made at the G20: to learn the lessons of the financial crisis.
Evelyn Regner
Mr President, Mr Reynders, Commissioner Barnier, we have already carried out a great deal of work - as Mr Gauzès said: 21 trialogues and numerous meetings between the rapporteurs and shadow rapporteurs from the Committee on Economic and Monetary Affairs and the Committee on Legal Affairs. Above all, however, we have been working to convince others for years. Like a Tibetan prayer wheel, the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament has been trying very hard for years to make hedge funds, private equity funds and all of the other financial vehicles subject to European regulation. On 26 October, Austria's National Day, of all days, we were finally able to find a compromise with the Member States. We do not live in an ideal world and therefore, the compromise is not perfect either. However, this piece of European legislation is the most important element so far in terms of financial market regulation. There is now an alternative to the old neoliberal pre-crisis killer argument that 'there is no alternative' when it comes to bringing the financial market back into line and restructuring it.
As far as I am concerned, the following two points are particularly important. Firstly, there are rules to prevent asset stripping to the effect that the reserves of companies that have been taken over may not be touched for two years. There are also rules regarding the liability of depositaries which prevent the creation of long, obscure chains of liability. These provisions represent minimum standards, which means that anyone who wants to can, and should, improve upon them. However, the regulation of alternative investment fund managers also provides a new opportunity to establish a new hedge fund culture. Small volume funds, in particular, have, hitherto, conducted extremely risky transactions, but must now change the way they do business. They now have the chance to establish themselves using a sustainable business model.
In order to ensure that this directive works - it should be noted that I am under no illusions when I say this - the Commission must keep a strict, watchful eye on the implementation and functioning of the directive and, if necessary, present the revision earlier than scheduled.
I would like to express my sincere thanks to Mr Gauzès. We worked together in a thoroughly constructive manner. I would also like to thank Mr Bullmann and Mr Goebbels. In particular, I would like to mention the strong spirit, indeed the will, that prevailed, including on the part of the Commission and the Council in the end, to arrive at a really constructive solution.
Burkhard Balz
Mr President, with the directive on alternative investment fund managers, we are now laying yet another important foundation stone on the way to establishing a new, stable financial market architecture in Europe. Our call for comprehensive and more effective crisis prevention will only reveal its full effect when we extend it to the whole of the financial sector and hence, also to the alternative investment funds that were previously regulated at national level only. This is a very heterogeneous sector having various different types of funds, risk profiles and also investment strategies.
The Commission's proposal for a directive was not easy to work with, but we have now found a common compromise that does not lump all funds and all fund managers together and that, at least in its approach, takes a differentiated view according to the systemic risk. We are today setting uniform standards throughout Europe for the approval of fund managers. In so doing, we will also give professional investors and custodians a share of the responsibility. With the additional regulations relating to private equity, we are preventing the asset stripping of portfolio companies. Admittedly, there is no justification in shaming the private equity industry per se, as it plays an important and also a constructive role - for example, in the financing of small and medium-sized enterprises. However, we will now prevent negative cases as a result of the fact that the substance of a company must be retained in the critical first years following the acquisition in particular.
Parliament's greatest success is surely the introduction of the common European passport, not only for European fund managers, but also for fund managers outside the EU. The latter only receive access to the European market if a cooperation agreement is in place to ensure information exchange between the supervisory authorities. In future, the European Securities Markets Authority will also be able to intervene in serious cases, and that means that the new legislation will be something of a first for us. We cannot draw on past experience, particularly with regard to arrangements relating to third countries, but I think that we have made a good start towards providing an effective supervisory framework.
Robert Goebbels
Mr President, ladies and gentlemen, after the outbreak of the crisis, the European summit and then the G20 launched an appeal to regulate all segments of the financial market in hedge funds. The Commission quickly made proposals, but lobbying of a rare intensity made some political decision makers reluctant to proceed with regulation. The United Kingdom stood up to protect hedge funds located in nearby or remote islands. France, the self-proclaimed champion of international regulation, has fallen back into its usual protectionism.
In Parliament, it was, primarily, the liberals who tried to oppose this legislation. Mr Verhofstadt's group, which is normally so pro-European, suggested rejecting the Commission's proposal completely. Thanks to the rapporteur, Mr Gauzès, and thanks to the coalition in the Committee on Economic and Monetary Affairs consisting of the Group of the European People's Party (Christian Democrats), the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament and the Group of the Greens/European Free Alliance, which was even supported by the Confederal Group of the European United Left - Nordic Green Left, a substantial majority position was put together. Twenty-one trialogues later, and thanks to the personal commitment of Mr Reynders and Commissioner Barnier, Parliament's negotiators arrived at a proposal for a directive, which is a notable step forward, especially in the medium term.
This is because we will have to wait until 2018 to have an internal market which imposes the same duties and obligations and also confers the same rights on all funds. The European regulation will be implemented from 2013. There will be an increase in the powers of the European regulator ESMA, to which the directive will grant no fewer than 72 intervention and supervision powers. It must be stressed that this directive is the first European legislative act to regulate hedge funds and private equity. It will ensure considerable protection for investors - not just professional investors, but also citizens investing their savings in financial products.
There will be very specific rules on risk management and cash management. There will be more transparency and more information for investors on the strategies followed by managers. Leverage will be monitored, with managers having to announce in advance their own limits for employing debt leverage. The regulators will be able to intervene if too risky a strategy is employed. The gold plated remuneration and bonuses of managers will be limited and will not be able to be cashed in full immediately. The directive will impose more transparency on private equity funds. These funds will be welcome to finance the real economy. However, the directive will seriously limit the scope for vulture-like funds to divide up companies. There will be a period of two years in which the capital and some of the reserves of the company acquired will not be able to be distributed to new proprietors.
In addition to this 'lock-in', the company's staff will be consulted, and the country in which the fund is registered will be informed about the business strategy of the buyers. In summary, the directive can be improved, Mr President, but the socialists and the democrats will give it their support, because it will bring a lot of light into the dark hole of international finance that alternative funds have represented up to now.
(Applause)
Wolf Klinz
Mr President, after lengthy rounds of negotiations, Parliament, the Council and the Commission have finally agreed on a joint text for regulating alternative investment fund managers. I welcome this, and I have to correct Mr Goebbels: We wished to send the original proposal back because we believed that the alternative investment funds were so different - hedge funds, private equity funds and property funds - that they each need to be regulated separately. Nevertheless, we now have a text that we can fully accept and support. The all-embracing approach that we found disturbing at first has been amended in respect of key elements. As a result, we no longer have a problem with it.
The goal of the directive was to create greater transparency for the supervisory bodies but, above all, for the investors, in order to be able to identify systemic risks in due time and at an early stage and so to be able to deal with them accordingly. Personally, I am in favour of rules that all fund managers operating in the EU have to abide by. At the same time, however, I do not like the idea of us turning Europe into a fortress or even a prison or of European institutions seeking to invest not being able to do so outside Europe. We were therefore initially unable to support the proposal as presented in committee. The compromise that has now been found solves this problem. It promises to keep the markets open.
Another reason for our initial rejection was the regulations relating to the area of private equity, which would, in fact, have led to distortions of competition in this area. The requirements for private equity, as they were initially formulated, would have placed even listed companies under a definite disadvantage. The compromise that we now have before us eliminates this shortcoming and it prevents asset stripping, which is something that we expressly welcome.
Overall, therefore, we are very pleased with the proposal. It creates clear framework conditions and rules for alternative investment fund managers. It will ensure greater transparency for identifying systemic risks. It will therefore ensure greater stability. It will strengthen the internal market because it introduces the EU passport, which, following a transitional period, will also be introduced for managers outside Europe. It will ensure clear, undistorted competition. Finally, it will establish a clear, new task for the European Securities and Markets Authority (ESMA).
To conclude, I would like to thank not only my fellow Members but, above all, the Belgian Presidency, which has brought this matter to a successful conclusion with its untiring efforts.
Sven Giegold
Mr President, this regulation of alternative investment fund managers provides, firstly, a little more in the way of transparency and rules in this impenetrable jungle of hedge funds and alternative investment funds. Unfortunately, these rules remain incomplete. It is still possible to place unregulated products on the internal market by using passive distribution. Essentially, market access for these products is not restricted effectively. Europe has thus missed an opportunity to extend its rules worldwide and to achieve uniform regulation.
Secondly, contrary to Parliament's wishes, there was, unfortunately, no effective balanced budget rule at European level for the funds. It is still left up to national rules to limit how far the funds can go into debt, and that also means that we are not learning the lessons from the crisis. As a result, there will be a national downhill race in respect of this regulation.
What is crucial for us once again is the fact that the asset stripping of companies by private equity funds is not prevented effectively. Of course, there are private equity investments that make sense for companies. However, the rules that are now being laid down are, unfortunately, a long way from being adequate. The rights of workers to information, which they quite rightly expect, are not effective, either, and neither is the protection of small and medium-sized enterprises against this type of asset stripping. In this case, therefore, this is very difficult to justify to the electorate. Unfortunately, the responsibility for this does not lie with Parliament. It lies, in particular, with the intensive lobbying by the sector concerned, which has had particular success with the UK Government, the French Government and, sadly, I have to say, to a certain extent with the German Government. This lobby was also represented here in Parliament by the Group of the Alliance of Liberals and Democrats for Europe.
We cannot support this proposal, because it would set a precedent for the failure of Parliament to implement effective rules. It is not possible for us to stand before our electorate with our heads held high and say that we have succeeded in regulating this netherworld effectively. We hope that we will make some progress in the revision of the directive. I would like to say a big thank you once again, particularly for the cooperation with my fellow Members in Parliament.
Syed Kamall
on behalf of the ECR Group. - Mr President, may I start by praising the hard efforts of Commissioner Michel Barnier? Thank you very much for coming to London to meet with hedge funds and private equity managers and hear their concerns. I would also like to thank the Belgian Presidency for their work, as some of my previous colleagues have said, and also Mr Gauzès and the other shadow rapporteurs. I shall not thank any more people because I will run out of time, given that I have only got one minute.
I think it is very important that we look at the issues and see how far we have come in eighteen months. I was one of the most critical people when it came to the original draft. Especially when it came to issues such as the scope, it seemed to be a one-size-fits-all directive, with the same rules for all sorts of funds - not just hedge funds and private equity but also investment trusts in the UK, which have existed for 150 years with no systemic risk. We are in a better place there.
I am very happy with where we have come on third country access: we have managed to keep markets open and to allow EU investors to continue to invest in non-EU funds. We have a level of transparency that does not put private equity at a significant disadvantage compared to sovereign wealth funds, and we have come to a better place on depository liability, where we are not concentrating systemic risk.
All in all, no one would say it is a perfect directive, but I think we have achieved a workable compromise. I hope that the majority of Parliament will support Mr Gauzès, the rapporteur, and the other shadow rapporteurs in the work we have done.
Jürgen Klute
Mr President, I would like to make two comments. The first is addressed to Mr Gauzès. I would like to thank him specifically for his excellent work and cooperation. However, I also found the cooperation with the other shadow rapporteurs to be exceptionally good and constructive. I wanted to say that right at the start before I come to my points of criticism.
I can, in principle, accept and reinforce what Mr Giegold has just said. I could have supported the first compromise that we agreed on in the Committee on Economic and Monetary Affairs in May of this year. Indeed, I was able to go along with the decision. However, what has now been produced as a result of further negotiations is, also in the opinion of my group, no longer acceptable and we can no longer support it. As I see it, everyone is entitled to his own opinion on the matter, but in my view, the Council has played an unfortunate role here. I will express this a bit clearer than one or two others have done. In my view, the Council has missed an opportunity here. It gave in to a considerable extent to the financial market lobby and used everything in its power to prevent an effective regulation at European level.
One morning, I received a call from a lobbyist, who said that if we really wanted to regulate private equities in this way, we would prevent development aid getting to Africa. A more absurd and obscure argument could not be found in this regard. These things have nothing to do with one another. Anyone who comes up with this sort of argument merely demonstrates the fact that he has no interest in meaningful and effective regulation.
However, this is not the concern of Parliament. On behalf of Parliament - and I would like to emphasise this once again - Mr Gauzès and other fellow Members fought for an effective regulation. That was undermined by the Council. I want to say this once again; this is passive marketing. This is a point that Mr Giegold has already mentioned. It is like someone being prohibited from selling rotten eggs at the weekly market if he advertises them, but if he does not advertise the rotten eggs and just stands there and sells them, then it is evidently legitimate. However, it is no different to what has been laid down here in the section relating to passive marketing. It provides an opening. We have a European regulation - that has already been said and I think it is a good thing. However, when the door is wide open for it to be circumvented through loopholes, then the question arises as to how effective this European regulation really is.
Private equities were originally regulated better. They are now relatively weakly regulated. A very important point - and here, too, I can only reinforce what Mr Giegold said - is the question of the information provided to the workforce. The original compromise stated that managers were obliged to inform their workforce of what they intended to do with the companies in which they had invested. What remains of this is the strained requirement for owners to inform their workforce and the works councils. You can imagine what will come of this - not very much. The Council has missed an opportunity here, and I hope that we will perhaps still be able to improve on it at a later date.
Marta Andreasen
on behalf of the EFD Group. - Mr President, I am less grateful than the previous speakers. From the very beginning, the AIFM Directive targeted the City of London, an industry that was already sufficiently regulated by the British authorities.
As usual, the EU misses the point: it is the banks' reckless lending that caused an almighty credit bubble and the financial crisis, not alternative investment funds. Will this regulation prevent a further crisis? Absolutely not. But it will certainly succeed in driving managers away from London. Sadly, they will not go to Paris or Frankfurt, but instead further afield: to New York and Singapore.
Are we in a position to afford such loss of business? Of course not, but the EU does not care. This directive will significantly add to the cost of these funds and reduce returns, driving smaller funds out of business. Its capital requirements will make it difficult for private equity funds, and it is venture capital start-ups that will suffer the consequences.
Funnily enough, the Commission claims it wants to encourage research, development and entrepreneurship, in order to restore growth to the European economy. Instead of encouraging venture capital, they are putting their trust in public funding which is too cumbersome and useless for this purpose.
It is also incredible to see how the EU has designed this directive from its ivory tower, turning deaf ears to regulatory developments in the rest of the world and adopting a protectionist and arrogant method, whereby the European Securities and Markets Authority will have the last word on who does business in Europe and where European funds invest.
But where is Mr Cameron in all this? He has betrayed the City of London - the most important British industry. He has allowed yet another transfer of power to Brussels without giving the British people a referendum. On behalf of British alternative fund managers, I can only say thank you very much, Mr Cameron. Don't come to us to help reactivate the British economy!
Hans-Peter Martin
(DE) Mr President, how I would like to stand before the electorate and say 'Yes, we have achieved great things. Yes, we have finally made a breakthrough where - in complete contrast to what the previous speaker said - in the opinion of the overwhelming majority of Europeans, we need clear rules'.
Unfortunately, however, a major opportunity has been missed once again. If, Commissioner, even as you are presenting this, you are already saying that the directive needs to be revised sooner than planned, and if various speakers are now saying 'It is all to do with the Council, but we, the European Parliament, are on the right side', then I have to ask: Why do we not just say 'no' tomorrow? Why are we allowing the European AIFM structure to continue to remain full of holes precisely because of this passive commercialisation? Why do we not hold on to that much applauded saying of the German Federal Chancellor: 'No product, no actor, no institution must remain unregulated'? Why is it that, precisely as a reaction to what will now go through on the nod tomorrow, here in this Parliament, we had to witness it being said for the first time from many different quarters - many Members from many different groups - that we need independent expertise, we need 'financewatch.org'? We have been made helpless in the face of the lobbyists. Why do we not have the nerve to indicate what we believe we are able to succeed with by saying 'no'? Why are we once again leaving precisely those who we should be representing in the lurch - in other words, with regard to private equity and the undermining of companies? I find that extremely disgraceful, and it will do more harm than good to Europe and the European idea, of which I am a great supporter.
Gunnar Hökmark
Mr President, let me first of all congratulate Mr Gauzès for a responsible and listening leadership in this difficult process. I would like to reiterate, not least for the benefit of colleagues who are saying that they will vote against this report tomorrow - this might seem so obvious that it should not be said, but sometimes the obvious things need to be said - that private equity and dynamic financial markets are not only important for a competitive economy, they are crucial.
We need them and they are good for a strong economy. That is why I think the report we are going to vote on tomorrow is worth our support. When we discuss private equity, we are talking about the opportunities for SMEs to grow and to develop. We have achieved a solution for private equity which will not give any disadvantage to private equity funds. It will provide us with openness for third countries and for investments in other parts of the world; that was not always the situation. We have, in that sense, bettered the legislation.
I think it is important that we have reduced the scope, so that we are not dealing with what were industrial companies now that we have made an exemption for holding companies. Had we accepted the original proposal, it would have meant that normal industrial companies and structures in a number of our countries would have been seen as financial institutions. That would have created new problems, not only for investments, but also for industrial development. All in all, as always, things could have been better, but the important thing is that now we have the preconditions for dynamic, financial markets which are good for the European economy.
Udo Bullmann
(DE) Mr President, ladies and gentlemen, as I listen to this debate, I have to admit that it reminds me very much of the debate on the Services Directive. I will tell you why. In that case, too, my fellow Members from the Group of the Greens/European Free Alliance and the Confederal Group of the European United Left - Nordic Green Left declared that there was a regulation on the table in this House that was not perfect, not complete, and yet for years now, they have been grateful for the fact that the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament managed to push it through in this House. That is the truth about this regulation that we will vote on tomorrow. In fact, the improvement made on what the Council and Commission proposed can essentially be attributed to Mr Goebbels and Mrs Regner, who fought for improvements here against the opposition, with the support and excellent cooperation of Mr Gauzès, for which I would like to thank him.
In my country, Germany, what we have agreed here for the private equity industry will bring about real improvements for workers and for small and medium-sized enterprises, which no longer need to be afraid of simply being eaten up by the black sheep of the equity industry that do not abide by any standards. These days, when we read and listen to the press telling us that the funds industry is moving its focus away from the Caribbean and towards Europe because it is important to long-term investors that there are good products in which to invest, that supports the work of this Parliament rather than running counter to it.
However, before we talk too much about dynamism here, I have to say that my group has been calling for a regulation since 2002. Perhaps there has been evidence of dynamism, but only in the last few weeks. I would like to thank the President-in-Office of the Council and the Commissioner, as you have personally supplied this dynamism. Please tell your colleagues in the Council that, with this method of sluggishness, of 'yes, but' and the refusal to put through better regulations in Europe, we will not succeed in getting the next pieces of legislation on derivatives or short selling through. This situation has to change. That is an appeal from this Parliament.
Sharon Bowles
Mr President, there have been long and difficult discussions on this directive in committee, in trialogues and variously in Member States, with the media, with venture capitalists and with fund managers of all types. Interestingly, the Member States that were most concerned about hedge fund activity were also those that did not have any regulation of hedge fund managers nor conduct-of-business rules to stop the selling to retail investors of some products only appropriate for professional investors. Similarly, the Member States most worried about asset stripping and hidden takeovers were ones without lower disclosure thresholds on shareholding and without disclosure of contracts for difference.
Now, wherever you are in the EU, there will be protection - and that is right. In the supervisory architecture, we have taken a big step towards a common rule book. The lesson of AIFM is that we must also take steps to early sharing of best practice.
So I say to the City, to my own Member State, the UK: be vigilant when promoting the export to Europe of a full range of market regulation with which you already comply. The end-product may not be exactly the same and therefore you will have to adjust, and I am afraid that does entail some cost. But sharing this best practice, exporting ideas early, is the way to avoid the trauma of legislation at a late stage.
That said, the end result that we have is an open and reasonably balanced one. It is not divergent from company law norms. It is not perfect, and it is certainly not as succinct as I would like but, given all the circumstances, I endorse it as a good result. I should like to thank personally Minister Reynders and Commissioner Barnier for their very important and active engagement in the trialogues.
Kay Swinburne
Mr President, the AIFM Directive was the very first piece of legislation that passed my desk after I was elected for the first time eighteen months ago, so to see it finally go through plenary this week, now that we have finally reached an agreement, is actually a relief. The putting in place of a passport regime for alternative investment funds, to operate across the entire EU alongside a single rule book governing their operations, should be another valuable piece in the creation of a true single market in financial services for Europe and should be welcomed by the industry in its current modified form.
As a former UK regulated fund manager, I now hope that this will soon become the mark of high quality in regulation for investors worldwide, as UCITS has been in the past and continues to be across the globe.
However, I hope that everyone who has been involved in this process has learnt some lessons along the way concerning the principles of better regulation. It is clear that this should not be held up as an example of better regulation and, given the extensive agenda of financial legislation over the coming months, I hope we can avoid a repetition of this inefficient process.
Astrid Lulling
(FR) Mr President, throughout the birthing pains of the directive on alternative investment fund managers, I have constantly argued in favour of equal treatment for all fund managers, irrespective of whether they come from the European Union. This may sound obvious, but in practice, there have been innumerable difficulties.
The text presented today is satisfactory. I would like to thank the negotiators, particularly our rapporteur, Mr Gauzès, who, having been through such a difficult birthing process, surely ought to be entitled to some well-earned parental leave.
I would like to stress that the treatment of third countries can be viewed in two different ways, depending on whether one is inside or outside the European Union. Largely as a result of the European Parliament's efforts, all funds that are sold in the European Union will effectively be subject to similar rules. Thus, we can now say that there is more or less a level playing field.
Nevertheless, during the transitional period, non-EU entities will be able to apply national investment rules, whereas EU funds and managers will be subject to the directive, which tends to be stricter. The situation is different for markets outside the European Union: European funds and their managers will still be subject to the directive, but third-country funds will not. Consequently, it will be much harder to market European products in the rest of the world because they will be less flexible and more expensive. We need to be aware of this disparity, although it was inevitable in this particular instance.
As for depositaries, given that we are imposing more restrictions on them too, specifically in the form of new responsibilities, the higher costs are bound to lead to far-reaching sectoral changes. Mr President, I am not saying this to express my opposition, but rather to emphasise that this new legislation is not the cure to all ills. It needs to be implemented but it will also create problems, and we need to recognise that.
Ivo Strejček
(CS) The emergence of hedge funds and private equity funds was the result of the strict regulation of the financial markets even before the outbreak of the financial crisis. Financial institutions therefore chose these instruments as ways of avoiding the regulations of the capital market. It is therefore not alternative investment funds which are the main reason for this, but the variety of regulations in existence, a situation which we are resolving with today's even stricter regulations. Capital has the ability to respond flexibly and is very mobile. Government intervention will not stop it, and if regulations are too tough, it will either force this segment of financial services to move outside the European Union or to find new, as yet unregulated forms. One can say with certainty that the material we are discussing is possibly a reaction to the past, but does not decrease the risk of future crises. However, I think that Mr Gauzès and his friends have done a good job.
Alfredo Pallone
(IT) Mr President, ladies and gentlemen, firstly, it seems obvious that I should thank the negotiators and, in particular, Mr Gauzès, together with the shadow rapporteurs, for the excellent work that has been achieved with regard to the directive on alternative investment fund managers, ensuring that the funds finally have a uniform set of rules within the entire European Union.
These funds are responsible for the management of a significant volume of assets invested in Europe and can exert a notable influence on the markets. Their impact is largely beneficial, but their activities can also contribute to spreading risk throughout the financial system.
The new common measures contribute to replacing the 27 different national systems of today and to strengthening the opportunities for the single market. Alternative funds therefore benefit from a European passport, independent of their place of registration. Furthermore, the single European system will prevent funds from profiting from legislation in states that offer more favourable regulatory regimes. In the past, this practice has entailed serious speculative risks for the entire European Union. I also agree with the introduction of rules relating to so-called 'asset-stripping' and to the ban on short selling - two points that were missing from the initial proposal from the European Commission.
Finally, in order to avoid distortions of competition, it is essential that a fund from a third country operating within the European Union benefits from the passport and may carry on business if it respects the same conditions as EU funds.
Theodor Dumitru Stolojan
(RO) I would first of all like to congratulate the rapporteur, Mr Gauzès. We would not have had this draft resolution tabled for debate today had it not been for the skill and tenacity of this gentleman and of those who cooperated with him, and for the Commission's and Council's involvement. I am going to vote for this report because of the benefit it will provide by making the activity of these funds transparent in terms of costs, investment policy and the risks which they also run. We are too well aware that without transparency, we cannot talk about the managers of these funds having responsibility.
In addition, by introducing supervision and monitoring of these funds, we can be sure that this will plug one of the gaps which still exist in Europe's financial supervision structure, thereby responding directly to the justified demands of European citizens who have been hit very hard by this financial crisis which has been triggered worldwide.
Diogo Feio
(PT) I would like to begin by congratulating the Commissioner, the representatives of the Council, the shadow rapporteurs and, in particular, Parliament's rapporteur. I am well aware of the effort that he put into this subject and the difficulties he underwent so that it would be possible to reach a consensus. Congratulations are therefore due to Mr Gauzès.
Getting down to business, I would like to point out three major aspects in the solution that was presented: firstly, there is a concern to connect with the real situation, which can be seen in the tendency to allow things that are different to be treated in different ways. The funds have different sums, different characteristics and different associated risks. Secondly, there is the aspect of concern for financial stability, which can be seen in the definition given for levels of capital. Thirdly, there is the concern with combating protectionist tendencies, which is amply demonstrated by the agreement relating to third countries. In short, this is a more transparent solution that offers greater security for the market and greater protection for the consumer. This is a more European solution, and one that is better for the internal market. Better regulation will certainly mean that we will have a better market.
Miroslav Mikolášik
(SK) I firmly believe that it is important to create a systematic framework for monitoring and supervising alternative investment funds. The regulation of these funds forms part of a broader regulation of the financial sector, aimed at preventing a repeat of the financial crisis.
I support the submitted proposal, and I would like to emphasise that we do not thereby wish to restrict the entry of alternative investment funds from third countries into the countries of the European Union, but to set out unified conditions which must be met, not only by the alternative investment funds, but also by the third countries in which they are based.
As publication of information and supervision are key elements in fulfilling the aims of the directive, it is important to introduce absolute transparency in respect of the supervisory bodies. I would like to end by congratulating Mr Gauzes for an excellent piece of work.
Zigmantas Balčytis
(LT) Thank you, Mr President. Firstly, I would like to thank the representatives of the European Commission and the rapporteurs for a very important document. The financial and economic crisis has exposed shortcomings in the operation and monitoring of our financial system. Today, legislation is already being adopted in Europe establishing a strict system at EU level which will allow the activities of financial institutions to be monitored and assessed and appropriate recommendations and action to be taken if necessary. As for alternative funds, the supervision system should also apply to them. If we want to achieve greater and improved stability in the financial system, and increase the protection of investors, i.e. our citizens, then the activities of such funds must also be controlled and subject to supervision at EU level. The rules must be the same for everyone operating in this field and we must not leave gaps for uncontrolled activity. We must learn from previous mistakes and not repeat them. I believe that it is not just Europe that is learning from them, but all the countries of the world.
Ilda Figueiredo
(PT) We are talking about a very important matter, especially bearing in mind the problems that occurred in the financial sector with this type of alternative investment funds. However, the truth is that these solutions do not solve the fundamental issues. The regulations are clearly insufficient and significant factors for speculative risk remain, as will be seen in the future. It is not enough to talk about supervision and regulation. What was needed was a clear position, putting an end to financial derivatives and to hedge funds, while also ensuring effective public and political control over the whole financial sector, especially over financial transactions, including an end to tax havens at a global level. The European Union must lead by example.
Seán Kelly
(GA) Madam President, like the other speakers I would like to congratulate Commissioner Barnier, the Belgian Presidency and Jean-Paul Gauzès on the good work they have done. Jean-Paul has given examples of that good work.
He said that there had been 1 170 amendments, 200 interviews and half a dozen trialogue meetings. That certainly is hard work and hopefully it will pay off.
After World War II the leaders - Schuman and others - said that this must never happen again. Now, 60 years on, we are saying the same arising out of the economic crisis and the failure of supervision and regulation. Thankfully, the new supervisory architecture will go a long way to ensuring that is the case, and today we will hopefully complete the picture through the AIMF.
However, I have one question and that is: are they satisfied that the reciprocity of market access which has been spoken about will establish a level playing field for the European Union?
Elena Băsescu
(RO) I would like to begin by thanking Mr Barnier and Mr Gauzès for the excellent results they achieved during the recent negotiations. One of the benefits of adopting this directive will be the monitoring of systemic risk. This will be carried out specifically based on cooperation between the national authorities and the European Systemic Risk Board. Another important form of cooperation will take place between the national agencies and the European Securities and Markets Authority. The latter will be able to make recommendations and be involved in monitoring national systems.
I also think it is important to include additional provisions relating to the transparency of the operations carried out by fund managers. At the same time, I welcome the introduction of a simpler regulation scheme for SME administrators in order to boost access to alternative investment sources.
Othmar Karas
(DE) Madam President, the hedge fund regulation is not a consequence of the crisis. It fills a legislative gap. It will take us a step further towards the Europeanisation of the internal market for financial products. What is it all about? We will register and authorise all funds. We will establish a minimum capital requirement of EUR 125 000. The European Securities and Markets Authority will be the supervisory body. Our principle of transparency will be applied to the investment strategy, investment policy, payment methods and the delegations. The concept of the single market will be put into practice by means of the passport. There will be no EU passport for funds having more than 30% of investments outside the EU. The bonus regulation that we have introduced for bank managers will also be extended to hedge fund managers in order to ensure sustainability here and to minimise the risk. This is a good result.
Michel Barnier
Thank you, Madam President. I imagine that Mr Reynders will also be thanking you when his turn comes. I would like to thank Parliament for its incredibly constructive approach during these rather lengthy negotiations, as evidenced by the debate that we have just had.
Mr Klinz spoke earlier about 'more transparency'. I have always believed that transparency is an essential feature of responsibility within the entire financial services sector. Which is why, in that very sector, we are now working together to create transparency, putting people under the spotlight who are probably unaccustomed to the glare.
Unlike Mrs Andreasen, I do not think that this transparency will hamper the finance industry's competitiveness. I think it will have quite the opposite effect. Back on 13 January, I explained to you that Europe is attractive to the financial industry: that is where we have the competitive edge over other regions of the world. The financial sector has an interest in gradually, piece by piece - because, ladies and gentlemen, we have not yet finished - creating healthier, more transparent and more trustworthy foundations. In fact, in my view, those foundations will often be a little more ethical.
As Mr Balz reminded us, this is the first time that we have introduced European rules for this key sector. These rules will play a vital role in achieving a range of ambitious objectives and making real progress - the word used by Mr Bullmann earlier to describe the work done by this Parliament in conjunction with the Council and Commission.
Progress means improving the supervision of systemic risk; it means greater protection for investors, as Mrs Bowles pointed out. It means a great deal more transparency in the private equity industry. Mr Hökmark has stressed the importance of that industry. And lastly, it means creating a real single market for alternative investment funds for institutional investors. Mr Kamall has reiterated his concern, which I share, that there should be no discrimination. Instead of discrimination, we now have a set of simple requirements. I think that is the right solution.
I would like to remind all those who hoped to go further, that this is a compromise, a dynamic compromise. We do not live in a perfect world, as Mrs Regner reminded us just now. That is true. We might have wanted to see a lot more progress than is found in the compromise text on which you will be voting, but it is a dynamic compromise and the review clauses mean that legislation will be able to evolve in the years to come. I can tell Mr Giegold and Mr Klute that there will be further discussions and that we will be returning in particular to the question of passive marketing and the role of the European Securities and Markets Authority (ESMA). The latter was a point raised just now by Mr Karas, while Mr Goebbels rightly reminded us earlier of the importance of the ESMA. Mr Goebbels, you mentioned 72 specific powers, within 11 different categories. This means that the ESMA will have real powers, and we owe this largely to Parliament's efforts.
So let me thank each and every one of you. Earlier, almost all of the speakers, from across all the groups, even those who are unlikely to vote in favour of this text, paid tribute to the rapporteur, Mr Gauzès, for being so receptive, for his expertise and for the quality of the relationships he has built. I do not think that he will have time to take parental leave, because there is a lot more work to be done in the coming weeks. Nevertheless, I would like to express my thanks to the whole Commission team who worked with me and are here this evening, and I would also like to add my voice, both personally and on behalf of the European Commission, to the chorus of thanks and gratitude addressed to the rapporteur, Mr Gauzès, in honour of his excellent work.
(Applause)
Didier Reynders
Madam President, I am not going to repeat everything that Mr Barnier has just said - I had my say earlier - but I would like to thank everybody who has spoken in support of the proposed text, and also those who have made comments which show, all the same, that this text has real substance, which will enable us to make progress at European level in the regulation of all these alternative investment funds.
This is the first truly European legislation on this subject, as I said earlier. I think that we need to recognise that strengthening ESMA's role is a step in the right direction. Several speakers have also mentioned passive marketing. We are taking a number of practical measures on this matter and on private equity funds, based on the need for ever more information and ever more transparency, including with regard to the staff in undertakings that are sometimes targeted by these funds' actions.
To conclude, I would like to make two points. Firstly, I have heard from some who feel that we have not gone far enough and others who feel that we should not have gone down the regulatory route at all. This leads me to the very Belgian conclusion that we have probably reached a good compromise. If both sides are critical of the compromise, then the reasoning underpinning our actions is probably sound.
To Mr Bullmann, I would just say that we have made some headway on the supervisory structure. We are now working on financial investments and will also be looking at investment funds and financial groups.
Let me congratulate Mr Gauzès once again. I said to him earlier that we would try to make progress with regard to rating agencies also, and I can tell him that both the Belgian Presidency and the Commission are willing to try to speed up the discussions on derivatives. I have double checked and can confirm that the report is scheduled for adoption by the Parliamentary committee in March next year.
If it proves possible to bring that date forward, we are willing to try to up the pace. Please do let us know if that seems feasible. I am delighted that we have reached an agreement on this kind of text. We will work towards adopting others in the coming weeks. Once again, my thanks. They are all the more sincere, Mr Gauzès, because we will go on working together over the next few days.
(Applause)
Jean-Paul Gauzès
Madam President, earlier, I spoke about the technical details. Allow me to use my last two minutes to express some richly deserved thanks: thank you first of all to all the fellow Members who have spoken today. My especial thanks to those who have said that they will be supporting the text, but to those who will not be voting in favour, I do not believe that putting me in the same bracket as Mr Cameron is really an insult either.
I would like to thank the shadow rapporteurs from the groups: Mr Goebbels, Mr Bullmann, Mr Canfin, Mr Klute, and Mrs Regner, the rapporteur for the opinion of the Committee on Legal Affairs. I wanted to name them all in recognition of the incredible support that they gave me during the first phase of this process. We were able to work together productively, each putting forward his or her own points of view, and I would like to thank them for that. I am delighted that the Group of the Alliance of Liberals and Democrats for Europe and the European Conservatives and Reformists have joined us now that a compromise has been reached and hence, I am delighted that Mr Klinz and Mr Kamall have co-signed with me the amendment that replaces the initial report.
Particular thanks go to Mr Barnier for his considerable involvement in this dossier: he knows how much I appreciate him. I know that he knows that Parliament is relying on him and will support him in putting in place these building blocks that are so dear both to him and to us. I know it is unusual, but I would also like to thank Ugo Bassi, with whom I have had a very fruitful working relationship during this time, and so the text is also the result of work done within the Commission.
As for you, Minister, earlier I felt that you contributed something when, in your thanks, you asked whether we would continue to make progress. So let me begin by thanking you, because without you we would never have achieved anything on the Member States' side. These are genuine thanks, not simply a polite gesture - I believe that your personal commitment has been key to the progress made in the Council and to the fact that we have reached an agreement. You have also succeeded in ensuring that all the main groups can identify with parts of the text and in obtaining the majority that we both wanted for this directive.
My thanks also for the contributions from our fellow Members on the left, without whose support the directive would not have the credibility that I am confident it will have tomorrow after a very broad vote. As you pointed out, this was vital for supervision, and vital for this directive too. I am also very grateful to your teams, Minister; please pass on my thanks. Some of the debates were pretty lively, but although I now live in Normandy, I come from the south, and sometimes my southern temperament wins out over the more balanced Norman approach.
I also wanted to say, Minister, President-in-Office of the ECOFIN Council, that I really hope that we will complete our work on rating agencies before the end of the year. For our part, we have the committee vote on 22 November, the vote in Strasbourg in December, and then, if the Council is ready, we will be ready.
(Applause)
President
The debate is closed.
The vote will take place tomorrow.
Written statements (Rule 149)
Dominique Baudis
The financial crisis that the world has gone through has shown that international financial exchanges need to be subject to minimum rules. Having stated in September that it was determined to supervise the markets, the European Parliament has today, 11 November, sent another powerful message to the rest of the world. From now on, alternative investment funds (hedge funds) entering Europe will be more strictly monitored and regulated by Europe. What is more, they will have to be declared to the authorities and managed within the European Union. The non-regulation of these resources caused many bankruptcies, stock exchange crashes and social crises. France is about to take over the G20 Presidency for a year. Its main priority will be to reform the international financial system. With this vote, Europe is blazing a trail.
Sebastian Valentin Bodu
This report about investment fund managers has triggered a huge amount of discussion both between the various groups in the European Parliament and between Parliament and the Council. I maintain the view, which was also expressed during the discussions prior to the vote in the Committee on Legal Affairs, that the Commission's proposal is a serious mistake and conveys a glaring lack of understanding about the role of investment funds (private equity and hedge), as well as confusion between banks as the institutions guilty of triggering the financial crisis, these closed-ended investment funds and the open-ended investment funds (mutual funds).
Behind the well-meaning principles, which have unfortunately been adopted by fellow Members who do not understand what financial management and macro-economics mean, lie hidden regulations which not only have nothing to do with preventing a new crisis, but will actually do nothing more than increase the costs of operating an alternative investment fund in an unjustified and absurd manner, which will be reflected in lower capital, smaller returns and fewer investments. I frankly admit that I am completely astounded that this steamroller attitude is prevalent in the EU, which is reminiscent of the 1950s when institutions were destroyed in Eastern Europe on the back of grand slogans.
George Sabin Cutaş
The economic and financial crisis has highlighted to us that we need to exercise tighter control over economic operators. They have exposed themselves to excessive risks which have caused upheaval in the global financial system. According to the European Central Bank's analysis, the business handled by alternative investment fund administrators amounts to approximately EUR 700 billion in assets in the European Union, which plays a major role in the financing of the latter's economy.
Consequently, I welcome the Commission's proposal on authorising and supervising these funds and on introducing a European passport in this area. Creating a European internal market for alternative fund administrators will help limit systemic risks and provide better protection for investors, in keeping with the new European economic supervisory structure. At the same time, the Commission will have to present an assessment of the results from this harmonisation process in good time, in order to ensure that this has not caused any distortion of the market.
Proinsias De Rossa
in writing. - I support this piece of legislation regulating hedge funds and private equity. While much more remains to be done in the field, this is an important step towards better regulation of the activities of alternative investment fund managers, which was met with opposition even after the 2008 financial crisis hit hard, most notably by Charlie McCreevy, the Internal Market commissioner in charge at the time. Once the new European supervisory authority becomes fully functional, fund managers will not be able to market their products in the European Union unless they hold a European passport certifying full compliance with this directive. Strict depositary liability will ensure that investors can always claim damages and will be informed of the reasons for potential delegation of liability. Critical new clauses, which we have insisted on and which were met with resistance in the Council, are the provisions combating asset stripping. Employees will be protected from predatory funds bent on short-term profiteering through the destruction of viable companies. Distributions to investors and capital reductions will be limited in the first two years after takeover, and employees will have access to information on the plans envisioned for their companies.
Jiří Havel
Alternative funds, such as hedge funds or private equity funds, probably contributed through their actions to the ongoing global crisis, and the question of their regulation is currently being discussed not only in the EU, but also in the US. The present report relates to the Rasmussen and Lehne reports, both from 2008, and deals with the proposal for a directive on alternative investment fund managers. The report gives a summary analysis of the problem of alternative funds, including a description of the key points: regulating the activity of alternative fund managers, including the creation of a single European passport; the obligation of alternative fund managers to appoint an independent asset valuator for each alternative fund they manage; a requirement to enhance the transparency of alternative funds and market disciplines and the regulation of short selling. The directive also enables the Member States to allow managers to offer alternative funds to non-professional investors as well. On the other hand, there are objections to the proposed regulation, such as the Larosière report, the Turner Review and the reaction of the Alternative Investment Management Association. The adoption of this directive should not entail significant changes for alternative funds in the Czech Republic because of the high level of current Czech regulations in this area. Overall, I think that the report submitted by my fellow Member, Mr Gauzès, contains an accurate analysis of this issue, as well as relevant recommendations regarding alternative funds, and I therefore recommend approving it in its proposed form.
Sirpa Pietikäinen
Ladies and gentlemen, I would first like to congratulate the rapporteur, Mr Gauzès, for his excellent work on this complex, technical and controversial report. When it appeared, the Commission's proposal on alternative investment fund managers provoked passion, criticism and praise in various quarters. It was criticised heavily and for having been drafted in secret. I myself thought that its biggest weakness was that it mixed two product clusters - different in terms of their nature and therefore their risks - in the same directive. These were private equity funds and hedge funds. One focuses on a speedy return, while with the other, the investment matures over a longer period. The risks are associated specifically with the first. The debate on the directive by Parliament and the Council resulted in a compromise - not a perfect one, but an acceptable one all the same. The directive on alternative investment fund managers constitutes an important part of the new system for financial regulation and supervision. We nevertheless have to remember that financial supervision will need to improve even after this directive has been adopted.
Marianne Thyssen
With tomorrow's vote, the EU will be putting into practice what was agreed at the G20 in London. Following on from the agreement on financial supervision, the European Parliament and the Belgian Presidency have shown that they are serious about reforming the financial system. The agreement reached is balanced in that it meets three concerns: containing systemic risk, protecting investors and guaranteeing a level playing field. Also important is that the EU does not close off its market to non-EU capital, which is a prerequisite to enable our European economy to breathe. The new harmonised rules will ensure transparency, legal certainty and a reinforced internal market.
The European passport, in particular, will authorise managers to operate throughout the European Union without having to be registered separately in each Member State. I should also like to emphasise that I am pleased with the solution that has been found regarding private equity. The lighter regime applicable to the managers of small funds will promote the creation and financing of new companies - often SMEs - in innovative sectors. Therefore, we must support with conviction the political agreement that has come about following 14 months of negotiations.
