EU Directive Threatens Canadian Hedge Fund Industry

Proposed regulations could affect international capital flows.

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903451_16811527A proposed European Union (EU) directive that  would force hedge funds to comply with a range of new requirements would shut non-EU managers out of the region says the Alternative Investment Management Association of Canada (AIMA Canada). The proposals, which were introduced in the wake of the financial crisis, are causing concern among Canadian hedge fund managers who believe they will restrict access and prevent them from raising capital in EU countries. Specific areas of concern with the directive include proposed regulations around depositaries and marketing.

According to AIMA Canada, Canadian alternative managers have traditionally looked to the EU as an important source of capital – implementing the directive could have an impact on the growth of the Canadian alternative industry and force some funds to drop their EU clients from the their funds.

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