Just in case you didn’t already know the investment industry is managing never-before-seen levels of regulations, we wanted to provide you with a list of the regulations affecting investment managers in the hedge fund, private equity and alternative management spaces.
You need to be aware of these regulations, as they will directly impact your chances of attracting capital from institutional investors.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Another law that was passed in light of the financial crisis, this Act’s objective is to protect consumers from potentially harmful financial products, regulate financial markets and limit the likelihood of another financial meltdown. Please note: the Senate recently passed legislation that could eliminate some aspects of Dodd-Frank.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act (“FATCA”) is looking to eliminate tax evasion by requiring U.S. taxpayers to report financial assets held outside of the U.S.
Alternative Investment Fund Managers Directive (“AIFMD”)
A European Union law enacted following the financial crisis that regulates alternative investment managers, including private equity and hedge funds, and mandating they be authorized with regulators and provide various disclosures to remain in business.
Basel III Proposal (banks)
Formed by the Basel Committee on Banking Supervision, this framework was developed to strengthen the global banking industry by requiring banks to maintain adequate capital levels, liquidity and risk management systems to decrease systemic risk.
Financial Transaction Tax
The Financial Transaction Tax (“FTT”) would seek to tax EU financial transactions, including the sales of stocks, bonds and derivatives, to recoup taxpayer dollars used to support banks during the financial crisis and eliminate speculative transactions that do not support a positive economic well-being.
Institutions for Occupational Retirement Provision II (pension funds)
The Institutions for Occupational Retirement Provision (“IORP”) seeks to protect pension members and establish rules to maintain the quality and sustainability of workplace pensions through disclosure requirements, governance, cross border transfers, etc.
Markets in Financial Instruments Directive II
The Markets in Financial Instruments Directive’s (“MiFID”) objective is to offer investor protection and further the transparency of all EU financial markets by making them more structured as well as mandating easier to observe trading costs, access lower cost data and improved transaction execution.
Find out more about MiFID here: Are you MiFID by regulatory changes?
Undertakings for Collective Investment in Transferable Securities V and VI
Undertakings for Collective Investment in Transferable Securities (“UCITS”) V looks to improve investor protection by enhancing depository duties, fund manager remuneration rules and sanctions for breaches, while giving regulators an adequate level of power to impose those rules. UCITS VI will tackle the use of derivatives, portfolio management techniques, long-term investments and money market funds.
Solvency II (insurance companies)
Solvency II was designed to protect insurance customers throughout the EU by instituting a regulatory framework around financial requirements, reporting and disclosure, as well as governance and supervision for the insurance industry.