Abstract
I am deeply honored and pleased by the invitation to present my observations regarding the European initiatives for the regulation of nonbank financial institutions to this distinguished audience. The topic confronts us with several difficulties. One is how to define nonbank financial institutions. So far there exists no agreement, what a bank is; most European legal systems operate with a definition which is considerably broader than the one used in the U.S.1 But this and other questions of drawing lines appear to be less relevant since the EU Commission in April 2009 presented the proposal for a “Directive on Alternative Investment Fund Managers,” abbreviated AIFMD.2 This proposal narrows the scope of my investigation. It explicitly excludes insurance companies, “credit institutions” and mutual funds;3 they are all subject to existing regulation4 like the UCITS-Directive;5 UCITS being the abbreviation for “undertakings for collective investment in transferable securities,” this is the official definition of mutual funds. The proposal equally excludes the management of pension funds and of “non-pooled investments” such as endowments, sovereign wealth funds or assets held on own account by credit institutions, insurance or reinsurance undertakings.6 The proposal contains a list of the institutions that should be regulated; the enumeration includes hedge funds, private equity funds, real estate funds, commodity funds, infrastructure funds, funds of hedge funds and “other types of institutional funds” like venture capital funds.7 The debates preceding and following the publication of the proposal indicate that the primary targets are hedge funds and—to a lesser degree—private equity funds.8 My paper will first present the content of the proposal. It will then give a short summary of the conflicting views and interests shaping the public debate. In a next step I shall briefly report the legislative reasons or policy objectives motivating the Commission and explained in a lengthy Commission Staff Working Document called “Impact Assessment.”9 Then we have to look at the costs that the implementation of the proposal would entail. From there we look to the other side of the cost-benefit-analysis, followed by a short conclusion.
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