The Limits of EU Hedge Fund Regulation
University of Oxford - Faculty of Law
February 8, 2011
(2011) 5:2 Law and Financial Markets Review 119
Oxford Legal Studies Research Paper No. 8/2011
This brief article examines the mechanics of the recently adopted EU Alternative Investment Fund Managers Directive. On balance, the results of this examination are not encouraging. The EU has failed to mount a persuasive case for why the Directive represents an improvement over existing national regulatory regimes or prevailing market practices in several key areas. Furthermore, by attempting to shoehorn an economically, strategically and operationally diverse population of financial institutions into a single, artificial class of regulated actors, the EU has established what is in many respects a conceptually muddled regulatory regime. Most importantly, however, the Directive’s approach toward the amelioration of the potential systemic risks associated with alternative investment funds manifests an inherent and ultimately fatal structural flaw. This flaw punctuates the necessity of a globally coordinated response toward macro-prudential risks arising within a globally integrated financial system.
Number of Pages in PDF File: 27
Keywords: Shadow banking, hedge funds, alternative investment funds, financial regulation, systemic risk, EU, directiveAccepted Paper Series
Date posted: February 12, 2011 ; Last revised: February 20, 2013
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