Posts tagged “private equity funds”

CFTC Proposes Joint Rule With SEC On Hedge, P.E. Disclosure

January 28th, 2011

A day after the Securities and Exchange Commission moved forward with plans to force hedge funds and private equity funds to increase their disclosures to regulators, the Commodity Futures Trading Commission followed suit.

The CFTC yesterday proposed a rule that would require private fund advisers to provide an array of information to it and the SEC for risk-monitoring purposes. The proposed new regulation, mandated by last year’s financial reform law, was written jointly by the two regulators. The SEC and CFTC would also share the information they collect with the Financial Stability Oversight Council.

Included in the information sought by the two agencies is data on leverage, counterparty risk and positions. While all funds would have to make some disclosures, the brunt of the new rule would fall on the largest managers, those with more than $1 billion, which will have to make more frequent and more detailed disclosures.

“What this does is bring more transparency to the regulators,” CFTC chief Gary Gensler said.

Both the CFTC and SEC are accepting comments on the proposal. Both will have to vote again to finalize the new rule.

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SEC Proposes Quarterly Reporting For Biggest Hedge, Private Equity Funds

January 25th, 2011

The biggest hedge funds in the U.S. will face the toughest regulatory burden under a new risk-reporting rule proposed today by the Securities and Exchange Commission.

The SEC unanimously voted to seek comment on the new rule, which would require hedge funds, private equity firms and other private investment fund advisers to maintain a wide range of information for sharing with regulators. The proposed joint rule with the Commodity Futures Trading Commission will be considered by that regulator tomorrow.

The new rule, required by the Dodd-Frank financial regulation reform law, will fall most heavily on firms managing more than $1 billion in assets. SEC Chairman Mary Schapiro notes that the 200 such firms in the U.S. control more than 80% of private fund assets under management.

“The information required would be ‘tiered’ so that we would receive more detailed information from larger private fund advisers, rather than imposing the same reporting requirements on all private funds,” Schapiro said. “While the group of large private fund advisers is relatively small in number, it represents a large majority of private funds’ assets.”

Those firms will be required to make quarterly reports on assets, leverage, positions, valuation and trading. That information will be shared by the SEC and CFTC with the Financial Stability Oversight Council.

Today’s vote opens a 60-day comment period.

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At Last! EU Reaches Final Agreement on “Passport” Regulations

October 27th, 2010

We have been reporting on this ongoing saga for some time, but it looks like the curtain is finally coming down.  Following a year of battling, back-biting and bickering, the representatives of the 27-member European Union have reached agreement on new regulations for foreign alternative investments – the so-called “passport” controversy.

It was a week ago that France and the U.K. struck their own deal on the directive, paving the way for its approval by the EU’s member states.  Those states have reached a deal that assures its passage by the European Parliament. Approval by both institutions is required for the proposal to become law, which it is now expected to do early next year.

The European Commission’s agreement with the parliament contains a few changes from the draft approved by EU governments. But those are relatively minor; the real heavy-lifting on the compromise was accomplished last week by EU finance ministers after an increasingly isolated France agreed to drop its opposition to granting access to all EU markets to foreign hedge funds.

The directive will impose strict new reporting and custody requirements on hedge funds and private equity funds, as well as placing them under the authority of the new European Securities and Markets Authority. Private equity funds will also face new asset-stripping rules.

The controversial passport will not come into effect for EU firms until 2013, and foreign funds will not be eligible until 2015. Until then, the current regime that allows each EU country to decide which funds will have access to their markets remains in place.

The European Parliament is set to vote on the directive on Nov. 11.

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Canadian Prime Broker Snaps Up BlueBay Asset Management

October 19th, 2010

BlueBay Asset Management's London headquarters

The Royal Bank of Canada is acquiring the U.K.-based BlueBay Asset Management PLC for $1.5 billion.  RBC will thus gain access to a valuable network of wealthy customers and institutional clients.

At midyear, BlueBay boasted C$34.3 billion in assets, 62% of which stemmed from institutional investors – a 2% smaller portion as compared to that of the previous year.  Wealthy private clients and third-party distributors are a growing segment of business, representing 30% of assets as compared to 26% the previous year.

“Much of BlueBay’s offering and RBC Global Asset Management’s offering is particularly suited for the high-net-worth and ultra-high-net-worth clients,” said George Lewis, head of RBC Wealth Management.

The acquisition of BlueBay enables RBC to initiate a greater number of institutional fixed-income solutions for retail clients who provide high revenues. One of the largest independents in Europe, BlueBay manages fixed-income debt funds, long-only funds, and alternative investment funds that span the full-range of fixed-income credit asset classes.

RBC’s acquisition follows an intensive search for hedge funds and private equity funds to purchase.  The strategy is to increase offerings to high-net-worth customers. Mr. Lewis indicated that it favors liability-driven investing — gaining assets to meet current and future liabilities – as an area of growth for pension plans and wealthy clients.

“Bringing an institutional approach to both retail and ultra-high-net-worth will be the trends that we will continually see,” John Montalbano, chief executive of RBC Global Asset Management, said in a call with analysts Monday.

He said he sees the quest for customized solutions on the institutional side spilling over to the ultra-high-net-worth customers, a niche that RBC has been aggressively going after.

RBC’s acquisition of BlueBay, valued at C$1.56 billion, is set to close at the end of December. The move follows RBC Wealth Management’s decision to set up standalone U.K. and Emerging Markets businesses, in addition to Canada and the U.S.; set up a trust business; and appoint a deputy chairman for Ultra High Net Worth – International.

UHNW, which RBC categorizes as those with at least C$25 million in net worth, represents 25% of RBC Wealth Management’s revenue, though they make up only 5% of the unit’s client base, Lewis said in an earlier interview.

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France Surrenders EU Passport Opposition

October 8th, 2010

There were indications yesterday that the French will no longer hold out against the majority of European Union members favoring new foreign hedge fund “passport” regulations. The shift could presage a breakthrough in the deal-making, which has been unexpectedly contentious in recent weeks. Foreign hedge funds are seeking a single centralized registration process that allows access to all EU member markets.

French diplomats dropped their outright opposition to the so-called “passport” for non-EU funds, which would give those hedge funds and private equity funds that meet stringent new EU standards access to all 27 member countries’ markets, a change from the current system where individual national regulators make the decision.

Last week, France, backed by Germany, announced it would not accept any passport for foreign hedge fund managers, appearing to sink a carefully-crafted compromise. Now, the French say they might accept such a provision, but only if the new European Securities and Markets Authority has the sole authority to issue the passport.

The passport proposal is backed by both the European Commission and European Parliament, as well as the U.K., home to the bulk of Europe’s alternative investments industry, and the U.S. On Tuesday, U.S. Treasury Secretary Timothy Geithner urged France to back the directive, calling its opposition to the passport for foreign hedge funds “discriminatory.”

France has denied that charge, saying it is only concern about “ensuring maximum protection for investors.”

France’s openness to accepting a passport does not ensure a deal, however. The French are willing to allow the current system of national regulators to remain in place until as late as 2016. Others, including the U.K., may want the current system to remain in place alongside the passport system, allowing individual countries to approve funds that fail the EU test.

“This is progress but not yet a breakthrough,” one diplomat told the Financial Times.

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