EU rules to boost protection for investors in hedge funds would quash Switzerland's bid to become the place of choice for alternative investment managers, the Swiss Funds Association's head said. The Alternative Investment Fund Managers (AIFM) directive stems from a request from G20 nations to strictly regulate the alternative investment management business, seen as a high-risk, to strengthen the global financial system.
But the draft rules contain provisions that would make it more difficult and costly for hedge funds, private equity firms and real estate funds managed in non-EU countries such as Switzerland to sell and market products in the 27-nation bloc. "If implemented as currently designed, the directive would make it barely possible to delegate the management of a EU-domiciled hedge fund to a third country like Switzerland," said Martin Thommen, President of the Swiss Funds Association.
"For Swiss-based specialised funds it would also be barely possible to sell into the EU. If this goes ahead, it would have a huge impact on our strategy," said Thommen, who is also Managing Director for UBS Global Asset Management.