Hedge Fund Regulation in the Eu

by Athanassiou, Phoebus

• ISBN13: 9789041128560
• ISBN10: 9041128565
• Format: Hardcover
• Copyright: 2009-04-10
• Publisher: Kluwer Law Intl

Summary

While hedge funds have been part and parcel of the global asset management landscape for well over fifty years, it is only relatively recently that they came to prominence as one of the fastest growing and most vigorous sub-sectors of the financial services industry. Despite their growing significance for global and European financial markets, hedge funds continue enjoying a sui generis regulatory status. The ongoing credit crisis and its lessons For The wisdom of unregulated or loosely regulated pockets of financial activity raise, with renewed urgency, The issue of deciding how long for the relative regulatory immunity of hedge funds is to be tolerated in the name of financial innovation. This well-thought-out book, The first of its kind in this particular field, examines the case For The European onshore hedge fund industryrs"s regulation, making concrete proposals for its normative future. Following a detailed account of the ls"establishedrs" regulatory systems in Ireland and Luxembourg, as well as of the ls"emergingrs" hedge fund jurisdictions in Italy, France, Spain and Germany, and of the regulatory treatment of hedge funds in the UK, this book examines to what extent the continuing exclusion of hedge funds from harmonized European regulation is defensible, whether their differences to traditional asset management products justify their distinct regulatory treatment and, ultimately, if their EU-wide regulation is possible and, if so, what form this should take. This book offers enormously valuable insights into all facets of the subject of the regulation of hedge funds, including: the legitimacy of the public policy interest in their activities; the conceptual underpinnings and systemic stability emphasis of a realistic hedge fund regulatory scheme; the main parameters of a workable onshore hedge fund regulatory framework; the role of investor protection and market integrity as part of a holistic hedge fund regulatory scheme; the possible use of the UCITS framework as a foundation For The EU-wide regulation of hedge funds; the MiFIDrs"s impact on the regulatory future of the European hedge fund industry; existing cross-jurisdictional differences and similarities in the normative treatment of hedge funds within the EU; hitherto initiatives and recommendations of the Community institutions and bodies; and the need for more efficient co-operation and information-sharing arrangements amongst national supervisors For The monitoring of the cross-border risks inherent in the activities of hedge funds. As the first ever comprehensive account of the profile, main features and normative future of the contemporary global and European hedge fund markets including a systematic inquiry into the conceptual underpinnings of hedge fund regulation and a detailed examination of the European hedge fund industryrs"s treatment under Community and domestic law this book represents a major contribution To The literature on hedge funds and their regulation which, through its concrete proposals For The onshore industryrs"s regulation and its clear analysis of the conditions necessary for their implementation, should be of extraordinary value to policymakers, supervisors and academics alike.

Table of Contents

Preface	p. xv
Acknowledgements	p. xvii
About the Author	p. xix
List of Abbreviations and Acronyms	p. xxi
Table of Legal Acts	p. xxiii
Table of Cases	p. xxix
Introduction	p. 1
Contemporary Hedge Fund Industry Profile and Conceptual Underpinnings of Hedge Fund Regulation	p. 9
Hedge Funds: Definition, Features, Evolution and Future Prospects	p. 11
Introduction	p. 11
Definition of Hedge Funds	p. 11
Origins of the Hedge Fund Industry	p. 17
Structural and Organizational Features Common to Hedge Funds	p. 20
Hedge Fund Investment Strategies	p. 26
Contemporary Hedge Fund Industry Size and Profile	p. 30
Size and Profile of the Global Industry	p. 30
Size and Profile of the European Industry	p. 33
Contemporary Hedge Fund Industry Evolution and Growth Prospects	p. 36
Global Hedge Fund Industry Evolution and Growth Prospects	p. 36
European Hedge Fund Industry Evolution and Growth Prospects	p. 43
Concluding Remarks	p. 47
The Case for Hedge Fund Regulation	p. 51
Introduction	p. 51
Principal Rationales for Financial Regulation and their Applicability	p. 51
Investor Protection	p. 52
Market Integrity and Fraud	p. 59
Systemic Stability	p. 64
Hedge Fund Default Episodes and their Lessons	p. 67
Hedge Fund Growth and Declining Profitability as Destabilizing Factors	p. 77
Hedge Funds and CRT Markets: Lessons from the Crisis	p. 79
Residual Rationales: The Case of 'Fund Activism'	p. 84
Conclusions	p. 90
Hedge Fund Benefits as Sui Generis Regulatory Rationales	p. 91
Impact of Hedge Fund Benefits on the Debate	p. 92
Contributions to Risk-sharing, Market Efficiency and Liquidity	p. 93
Contribution to Resolving Europe's Pension 'Time Bomb'	p. 96
Concluding Remarks	p. 98
Hedge Funds under Community and Domestic Law	p. 101
Hedge Funds and Community Law	p. 103
Introduction	p. 103
Hedge Funds and the UCITS Framework	p. 104
Hedge Funds and the MiFID	p. 109
Hedge Funds and Other Community Legal Rules	p. 113
Private Placements as a Hedge Fund Distribution Channel?	p. 117
Concluding Remarks	p. 121
Hedge Fund Regulation in Selected European Jurisdictions	p. 125
Introduction	p. 125
'Established' European Hedge Fund Jurisdictions	p. 126
Overview of Hedge Fund Regulation in Ireland	p. 126
Overview of Hedge Fund Regulation in Luxembourg	p. 129
'Emerging' European Hedge Fund Jurisdictions	p. 132
Overview of Hedge Fund Regulation in Italy	p. 132
Overview of Hedge Fund Regulation in France	p. 135
Overview of Hedge Fund Regulation in Spain	p. 138
Overview of Hedge Fund Regulation in Germany	p. 141
Hedge Fund Regulation in the UK	p. 145
Differences and Similarities between European Regulatory Schemes	p. 150
Main Differences between European Hedge Fund Regulatory Schemes	p. 150
Main Similarities between European Hedge Fund Regulatory Schemes	p. 154
Conclusions drawn from the Comparison of Domestic Schemes	p. 157
Concluding Remarks and Hedge Fund Regulation in the US	p. 158
European Hedge Fund Initiatives and Regulatory Proposals	p. 165
Introduction	p. 165
The Purvis Report and the European Parliament Resolutions	p. 166
The European Commission's Involvement in the Regulatory Debate	p. 168
The Alternative Investment Expert Group Report	p. 172
The ECOFIN's Involvement in the Regulatory Debate	p. 175
The ECB's Approach to Hedge Funds	p. 177
Concluding Remarks and Recent Developments in the US	p. 181
Europe's Onshore Hedge Fund Industry: A Normative Proposal	p. 191
Harmonized Hedge Fund Regulation in the European Union	p. 193
Introduction	p. 193
Regulatory Architecture	p. 193
The Geographical Dimension of Hedge Fund Regulation	p. 193
Type of Regulation	p. 215
External Versus Self-regulation	p. 216
Direct Versus Indirect Regulation	p. 226
Proposed Set-up and Contents of a European Framework	p. 236
A Self-contained or a Subordinate Regulatory Framework?	p. 236
A Single, All-Encompassing Regime or a Partial Solution?	p. 240
Proposed Contents of European Hedge Fund Regulatory Framework	p. 242
Systemic Stability-inspired Direct Regulatory Measures	p. 243
Systemic Stability-inspired Indirect Regulatory Measures	p. 252
Investor Protection-inspired and Transparency-motivated Direct Regulatory Measures	p. 258
Concluding Remarks	p. 263
Hedge Fund Regulation and Europe's Supervisory and Financial Stability Arrangements	p. 267
Introduction	p. 267
Impact of Supervisory Arrangements on the Efficiency of Harmonized Regulation	p. 268
Impact of Europe's Financial Stability Framework on Information Sharing	p. 278
Concluding Remarks	p. 293
Endnote - What Objections to Hedge Fund Regulation?	p. 295
Introduction	p. 295
'Hedge Fund Risks Have Not Been Clearly Demonstrated'	p. 295
'There is No Definition of Hedge Funds'	p. 298
'Regulation is Incompatible with Hedge Funds'	p. 299
'Regulation will drive Hedge Funds Offshore'	p. 301
'The Crisis has shown Hedge Fund Regulation to be Unnecessary'	p. 304
Concluding Remarks	p. 308
List of References	p. 311
Index	p. 343
Table of Contents provided by Ingram. All Rights Reserved.