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Giorgio Tosetti Dardanelli
Direct or Indirect Regulation of Hedge Funds: A European Dilemma
| European Journal of Risk Regulation 4/2011: pp. 463-480 |
€ 41,65 (including 19 % tax)
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This paper deals with the debate on the methods to regulate hedge funds, with a particular
focus on direct or indirect regulation. After having briefly examined the pros and the cons
of directly regulating these investment schemes, it comes to the conclusion (largely shared
by most scholars) that hedge funds should not be directly regulated, while regulation should
concern their management companies and, most of all, their counterparts (lenders in the
first place) with a view to managing systemic risk. In addition, regulation should also set
precise thresholds for access which should aim at protecting unsophisticated investors from
hazardous moves, without, however, falling into the trap of regulating hedge fund themselves.
The attention is then turned to the European Union and to its Alternative Investment Fund
Managers Directive (AIFMD). An analysis is conducted on some of the most significant
approaches to hedge fund regulation which have fuelled (and are partly still fuelling) the
debate within EU institutions in its struggle to provide Member States with a valid response
to the financial crisis, and on some key provisions of the first level AIFMD. In this light the
author concludes that, despite the declared intent to regulated fund managers, the directive
often seems to regulate hedge fund themselves. This does not seem to be in line with the
thoughts of most scholars and market operators on hedge fund regulation and also looks at
odds with other pieces of EU legislation (in particular with the so-called “Newcits”). |
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EStAL
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ISSN 16 19-52 72
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Reading of Intimate
Brussels - Living amongst Eurocrats
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