The Alternative Investment Management Association (AIMA) – the global hedge fund industry association – has reiterated its support for the registration of hedge fund managers in the U.S. and for the reporting of systemically relevant information by larger managers to national authorities in the interests of financial stability.
The move comes as the bill (sponsored by Rep. Paul Kanjorski) that will require hedge fund managers operating in the U.S. to register with and be supervised by the Securities and Exchange Commission (SEC) won bi-partisan support from the House Financial Services Committee. The Private Fund Investment Advisers Registration Act 2009 will make the registration of hedge fund managers in the U.S. mandatory for the first time.
Todd Groome, AIMA Chairman, said: “We have supported the registration of managers in the U.S. and elsewhere as well as the reporting of systemically relevant information to national authorities in the interests of financial stability. Our industry recognizes the need to constructively support efforts to improve financial stability analysis and has worked with U.S. authorities voluntarily in this regard for many years.”
AIMA, which represents hedge fund managers and a wide variety of industry participants in the U.S. and globally, supports the registration and supervision of hedge fund managers by their domestic authorities. Until now, U.S. hedge fund managers who registered with the SEC have done so voluntarily.
The bill now faces a vote on the floor of the House - possibly in early December - before it is sent to the Senate. This process allows for further revisions to be made to the bill, and AIMA will continue to work with policymakers to address several areas where the bill may be improved before it is passed into law.
Todd Groome added, “Registration of hedge fund managers and the supervisory dialogue that this creates between managers and the authorities is valuable, but it is not a costless exercise. It is important that the reporting of market information in the interests of financial stability focuses on relevant information and is consistent with the supervisory capacity of national authorities; managers should not be burdened with expensive and unnecessary reporting requirements. If we ask even smaller managers to provide such information, we run the risk of overwhelming managers and supervisors. It is a question of striking the right balance.”
The bill also has implications for non-U.S. managers who could face ‘dual registration’. AIMA is seeking a full exemption from registration in the U.S. for non-U.S. fund managers who are already registered in a ‘relevant jurisdiction’, such as those based in an OECD country or others especially where the domestic regulator may cooperate and share information with the SEC.
Todd Groome concluded: “It is important to ensure that any new regulatory framework does not create unintended consequences, such as duplicative requirements or unnecessary additional costs on hedge fund managers. We look forward to continuing our dialogue with policymakers on possible revisions and further enhancements to the bill. ”