US/EUROPE - US Treasury secretary Timothy Geithner has written to four European finance ministers urging them not to discriminate against foreign players in the alternative investment space as they continue negotiations on the Alternative Investment Fund Manager (AIFM) directive.
In a letter to Alistair Darling, Wolfgang Schäuble, Christine Lagarde and Elena Salgado Méndez, Geithner (pictured) wrote: "I hope you will keep in mind our shared commitment to create regulatory reform...that maintains a level playing field."
This new plea comes after another letter Geithner sent last month to Michel Barnier, European Union commissioner for internal market and services. In that letter, he made it clear that the EU was heading for a clash with Washington if it pushed ahead with what the US fear could be a protectionist law. (Global Pensions, March 11, 2010)
The current version of the AIFM directive contains a much criticised rule, which would require non-EU alternative funds to gain an "EU passport" to be able to market their products to EU investors.
Geithner said: "It is my hope that this provision will be revised to provide non-EU funds, fund managers and global custodians the same access as their EU counterparts and promote a single market."
The US secretary added the US was actively implementing the G-20 commitments to strengthen regulation and oversight of hedge funds and that he "looked forward to more discussions" with the ministers about the respective financial reforms.
The offices of the four ministries of finance did not immediately reply to emails seeking comment.
The Alternative Investment Management Association chief executive Andrew Baker said world leaders G-20 leaders agreed at the London G-20 summit a year ago that all hedge fund managers "should be registered and authorised by their regulator, and that those managers should report systemic data to those regulators in the interests of financial stability".
He added: "They concluded with a ringing declaration that they would not follow a protectionist path. Timothy Geithner's important letter illustrates the international concern that Europe's AIFM directive has diverged from the G-20 path and will have a protectionist outcome."
The European Private Equity and Venture Capital Association secretary general Javier Echarri said the letter highlighted international concern regarding the exclusion of non EU managers and non EU funds from the single market.
He added: "We all want to see regulation that is fair and does not discriminate unreasonably against fund managers from different jurisdictions. In fact this is the only pragmatic approach towards achieving a level of globally co-ordinated regulation."
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