As reported by Reuters, one of Europe’s top regulators said paid curbs are not in the cards – avoiding caps on bonuses for bankers. However, managers can still expect restrictions on the manner and timing of their pay under new regulations which went into effect July 14.
The Alternative Investment Fund Managers Directive (AIFMD) is the European Union's attempt to help protect investors and regulate funds based in the European Union – currently around eight trillion euros in AUM, per the article.
AIFMD, which effectively creates a single market for hedge funds in the 28-nation bloc, requires managers to comply with a host of new regulations. These include minimum capital levels and disclosures to investors and regulators. One rule will limit the amount of any bonus paid in cash to 50 percent of the total, according to the article.
Critics argue that the rules could increase systemic risk in the industry by driving some funds outside the European Union, where they can trade with less scrutiny. Hedge fund managers face a transitional year before the new rules take full effect. Many are looking to see whether any EU states opt out of some or all of the remuneration guidelines.