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EU Hedge Fund Regulation

EU Hedge Fund Regulation

EU Directive Could Cost Hedge Funds £2.9 billion


The European Union's new bill, the Directive on Alternative Investment Fund Managers, is expected to cost hedge funds and private equity firms up to £2.9 billion ($4.7 billion).  Also, alternative investment firms will have to shoulder annual costs estimated around £283 ($463 million).  The combination of a costly registration, having to adhere to greater disclosure requirements, and the limiting of leverage make for a harsh legislation targeting alternative assets that could have significant effect on other industries as well.

The study, conducted by Charles River Associates for City watchdog the FSA, also said the affected firms would be hit with annual costs of around €311m.   The EU is planning to force fund managers to sign up to a costly registration and disclosure regime, and to adhere to caps on leverage.

Hedge funds would bear the brunt, paying €1.4bn in one-off costs to comply with the directive.  Private equity firms face one-off costs of up to €756m, but they would bear the largest ongoing costs, totalling €248m a year, the study found.  And the report said that pension funds would be £1bn a year worse-off under the EU proposals.  Source

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Tags:  alternative assets, alternative investment fund managers, fund management rules, european union alternative assets, eu directive, european union compliance laws

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