aima (hedge funds) journal_q1 2010

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First issue of AIMA Journal 2010 on hedge funds


Alternative Investment Management AssociationAIMA JournalThe Global Forum for the Global Alternative Investment Management IndustryQ1 No. 82I amdelightedthattheAIMAJournal,ourfagshipquarterly publication, is back at the start of our 20th anniversary year. I do hope you fnd it an enjoyable and valuable read. Itisnowalmostexactlyayearsincewe,astheglobalhedge fund industry association, publicly announcedour support for the principleoftransparency-wesaidthatitwasdesirablethatall hedgefundmanagersshouldberegisteredandauthorisedbythe authorities, and that the larger managers reported data of systemic relevance.If the concern of international policymakers after the crisis was that theyhadinsuffcientinformationaboutthebuild-upofsystemic risksinfnancialmarkets,ourresponseonbehalfofourindustry was to offer our full co-operation in contributing to structures that wouldsupplythemwiththetimely,relevantinformationwhich they needed to address fnancial stability issues.Our announcement came before the G20 summit in London, and it was gratifying that the path that that summit set for the regulation of our industry was on these principles.Our work globally since then has been about working with individual regulatorsandwithsupranationalbodiestocreatetheright supervisoryframeworkfortheindustry. Afterall,wesharetheir desire for improved fnancial stability.Transparencyisattheheartnotonlyoftheindustrysapproach towardssupervisionbutalsoitsrelationshipwithinvestors.Itis rightthat,withtheincreasingmaturityandsophisticationofthe industryandwiththeincreasinginvestmentintheindustryby institutionalinvestors,greatertransparencyisbothofferedby managers and sought by investors. We believe that institutional investors now account for an absolute majority of assets under management by the industry, and that that proportion is steadily increasing. This is a testimony to the success oftheindustry,notleastintermsofofferinghigherreturnsand lower volatility than other asset classes. There is an alignment of interests between investor and manager in our industry that promotes sustainable and successful investment. Withtheindustryonceagainreceivingnetinfowsandreturnsat their best levels for a decade, we can look forward to the future with confdence.Finally,Iwouldliketo paytributetoFlorence Lombard,whowillshortly besteppingdownas Executive Director. ItisFlorencewho,over hermanyyearsofservice, hasthroughthestrength ofherpersonalityandthe breadth of her vision turned theassociationintoatruly globalorganisation,and forthiswealloweheran enormous debt of gratitude. Onapersonalnote,Iwill greatlymissworkingwith herandIwishherevery happiness in this next stage of her life.I very much hope you enjoy readingthenewAIMA Journal - and as always, we welcome your feedback.Looking to the future with confdenceAndrew BakerChief Executive Offcer, Alternative Investment Management AssociationAddress froM the Ceo2 AIMA Journal Q1 2010AIMAsstrengthisthatitisaglobal organisationwithrepresentation acrosstheworld.Iwantedtolookat some of the key challenges we will be facing globally this year.eMeASo great was our concern about the European Commissions(ECs)proposedAlternative InvestmentFundManagers(AIFM)Directive thatwemobilisedtheindustryonan unprecedentedscaletorespondtoit.The originalproposalfromtheEChadprovisions in it that would have adversely impacted the industry globally, not just in Europe. I would justliketotakethisopportunityonceagain tothankallofyouwhohavebeeninvolved in,orsupported,ourcampaign.Ithasbeen extremelygratifyingthattheindustryhas respondedtothisgravethreatwithsucha display of unity. We have made considerable progress since the originaldraftoftheDirectivewaspublished last April, and it is encouraging that the new Spanish Presidency of the EU has said that it willbuildonthegoodworkoftheSwedish Presidency.Butthereisstillalongwayto go. We hope that our sensible and moderate message that we support good regulation and are offering our assistance to policymakers to help them produce that will prevail. FormoreonourAIFMDirectivecampaign, turn to page six.the AmericasIntheU.S,wesupportmanyofthe regulatory measures likely to be passed this year. In common with our position elsewhere aroundtheworld,wewouldwelcomethe registrationofmanagersandthereporting ofsystemicallyrelevantinformationby larger managers in the U.S..Weare,however,alsoconcernedabout regulationintheU.S.thatcouldnegatively impactboththeglobalindustry(for example,throughdualregistration)and theU.S.industry(forexamplethrough disproportionatecontributionstothe proposed Systemic Resolution Fund).TheHouseofRepresentativesvotedona version of wide-ranging legislation before the end of 2009, while the Senate has just started todebateit.Bothchamberswilleventually have to agree on a reconciled third version ofthelegislationbeforeitcanbesentto PresidentObamaforhisapproval.Andwe awaitfurtherdetailsaboutthePresidents banking proposals with interest.InCanada,theimplementationofNational Instrument31-103willmeanallhedge fundmanagerswillhavetoregisterwith securities regulators. AlsoinCanada,newaccountingstandards andtheimplementationofInternational Financial Reporting Standards will affect both how hedge funds report their net asset values andhowtheydeterminethevaluesoftheir underlying securities. Furthermore,anationalharmonisedsales taxonallgoodsandservicesinCanada will affect the tax treatment of hedge fund management fees.Meanwhile, our National Group in the Cayman Islands has much to look forward to in 2010. Fresh fromthepositivereviewsthejurisdictionhas received from the IMF and UK government and aftertheCaymanIslandsMonetary Authoritys accessiontoIOSCOlastyear,Caymanin2010 canbeexpectedtostrikeyetmorebilateral agreements on co-operation and the exchange of information with OECD member states. At the same time, AIMA Cayman will continue tosupportinitiativesthatenhancethe CaymanIslandsinternationalreputationfor openness and transparency. Asia-PacifcWhile Hong Kongs existing robust set of short-sellingrulesmeantthatthejurisdictionwas one of the few international fnancial centres in the world not to place a temporary ban on such activities during the fnancial crisis, the authoritiesthereareneverthelessplanning gradualchangestotheregulatorysystemin 2010.InHongKong,ofcourse,mandatory registrationandindependentadministration are already cornerstones of the jurisdictions regulatory system. InSingapore,therecontinuestobe considerableinterestfromallocators. Similarly,start-upactivitytherehasbeen strongoverthelast12-18monthsandthis oughttoimprovefurtherin2010ascapital raisingbecomeseasier.2010couldalsosee anevenclearerdelineationbetweenthe boutiques and the institutional frms.Therearetwonoteworthyissuesonthe regulatoryfrontinAustralia.First,the AustralianTaxationOffceisproposing awithholdingtaxpolicythatcould disadvantageforeignpurchasersof Australianassets.Wesubmittedaresponse totheAustralianTaxOffcesDraftTax Determinations of December 2009 (TD 2009/D17andTD2009/D18)inFebruary2010. Themainpointsmadeinoursubmission concernthepotentiallynegativeeffectfor theAustralianfundsindustry,withregard totheissuesforoffshoredomiciledhedge funds and for Australian-sourced income for foreign investors. Andsecond,ashort-sellingregimewillbe introduced in Australia on 1 April 2010 that will see daily disclosures of positions to the regulator andaggregatedpositionsmadeavailableto the market after only three days. Last year, a working group of the regulatory committee was formed when the ban for short selling was frst introduced.Theworkinggrouphasengaged actively with regulators.In conclusionTheseareonlysomeofthelikelyheadlines for2010.Butwhateverarises,AIMAwill continuetoarguethatitisineveryones interests, whether they are policymakers who regulateorthemarketparticipantswhoare regulated, that we are able to produce global regulation of our industry that is transparent, proportionate, consistent and workable. What lies in store in 2010Address froM the Ceo GLoBAL reVIeWBy Andrew Baker, CEO, AIMAAIMA Journal Q1 2010 3CoNteNtsAddress froM the Ceo

SPONSORING MEMBERS OF AIMAPrimeFundSolutions1 Looking to the future with confdencedIreCtIVe CAMPAIGN 6how our AIfMd campaign has progressedreGULAtorY & tAX 9Key updates from the reg & tax departmentMedIA eYe12Media coverage of AIMA and the industryWorLd VIeW14News from our National Groups around the globeshort seLLING18techInvest on the impact of Australias temporary banCAYMAN UPdAte21Maples and Calder on Caymans post-crisis recoveryIrIsh oPPortUNItY17 A&L Goodbody on Irelands new funds legislationNeW MeMBers22 AIMA members who joined in Q4 2009CoNtACt Us 24 how to reach usGLoBAL reVIeW 2 What lies ahead in 2010 around the worldAIMA ANNIVersArY 5 A look back as we turn 20thoUGht LeAdershIP 15 tackling systemic risk by AIMA Chairman todd GroomeoBItUArY 16 the hedge fund industry loses another friendfLoreNCe LoMBArd 5 A tribute to her 16 years of service at AIMAThe AIMA Journal is published quarterly by the Alternative Investment Management Association Ltd (AIMA). The views and opinions expressed do not necessarily refect those of the AIMA Membership. AIMA does not accept responsibility for any statements herein. Reproduction of part or all of the contents of this publication is strictly prohibited, unless prior permission is given by AIMA. The Alternative Investment Management Association Ltd (AIMA). All rights reserved.AIMA sPoNsorING MeMBerOr contact:CME Group provides hedge funds:8ecurity and conldence Deep liquidityAnonynity and transparency8uperior tradinc technolocyFlexible clearinc servicesWide rance ol productsTo learn more, visit our new hedge fund Web page at and our Managed Futures Resource Center at Huckrenaud.huckcnecroup.con+44 ?0 //96 /l06Associate Director, Hedge Funds EMEAPierre Prunierpierre.pruniercnecroup.con+65 6593 558?Director, Hedge Funds AsiaWere a dedicated partner to the he