Martin Cornish, head of European Fund Management, K&L Gates
Hedge fund managers are faced with an unprecedented assault on their business models. They need to think outside the box – notably the box created by the EU Alternative Investment Fund Manager Directive (AIFMD) – to ensure their businesses are not unduly compromised.
As is often the case with excessive regulation and tax, the likely industry response will be to move some business out of the EU (indeed some already have) with the unintended consequence that the EU will see a fall in assets under management from within the EU; and most probably a fall in tax revenues also.
Both regulation and tax are encouraging managers to set up operations outside the EU, not abandoning the EU entirely, but keeping those parts of their non-EU business entirely outside the reach of the EU regulators and thus minimising the commercial and...