The European Fund and Asset Management Association (EFAMA) has spoken out on the negative impact the so-called Volcker Rule could have on the industry.
EFAMA says its fully recognises the challenges the US authorities face in implementing the Volcker Rule and the need to prevent banks in the US from avoiding the Rule by choosing to conduct otherwise prohibited activities outside of the US.
However, EFAMA believes that in their current form, the proposed rules represent an "inappropriate extraterritorial application of US jurisdiction and significantly exacerbate the negative impact the Volcker Rule will have on the European asset management industry."
The Association has spoken of its greatest concern with the proposed rules being the potentially disparate treatment of US mutual funds, on the one hand, and UCITS and other regulated investment funds available to European investors, on the other. US mutual funds are not considered to be ‘covered funds’ under the proposed rules, while their regulated European counterparts appear to be treated as such. EFAMA says the proposed rules offer no policy reason or justification for this unequal treatment of very similar investment products.
Peter De Proft, Director General of EFAMA, says, “Our members are deeply concerned about the extraterritorial impact of the Volcker rule on the structure of the European asset management industry. If these issues are not resolved, the rules would lead to extensive and expensive restructuring of an industry which has nothing to do with the aims of the Volcker Rule. It simply cannot be right that the Volcker Rule bites harder in Europe than in the US.
“EFAMA believes that these problems can be avoided, or at least substantially mitigated, without sacrificing the objectives of the Volcker Rule, through revisions to the proposed rules.”
The Association says it stands ready to work with the US authorities to make the proposals workable for European asset managers and their clients.
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