So said a number of experts at an Association of the Luxembourg Fund Industry event in the Grand Duchy, which kicked off yesterday and continues today.
The AIFMD took effect on 22 July this year. Luxembourg was one of the first countries to transcribe it into law.
“In the beginning, there was a lot of ‘Chicken Little’, ‘the sky is falling’, 'we aren’t going to be able to continue [doing business the way we have been]'”, Geoffrey Cook, a partner at Brown Brothers Harriman in Luxembourg, recalled, during a panel discussion this morning.
“[But] I think the reality has been there has been a positioning that has been acceptable to the vast majority of participants.”
Major issues remain to be resolved, though, Cook, who is unrelated to Jersey Finance chief executive Geoff Cook, added, citing uncertainty still about how much it will add to costs and risk levels.
“Whenever a new regulation is proposed – and the AIFMD is an example of this – people start shouting ‘Oh, this is terrible, this is the end of the City of London, this is madness’,” Charles Muller, a partner in KPMG Luxembourg and a former deputy director general of ALFI, said, in an interview before today’s programme began.
“And then after a while the people get accustomed to it, they accept the explanation for why the regulation is the way it is, and what the shortcomings are that the rulemakers are trying to prevent.
“What strikes me about what we have been hearing at this conference so far is that people are now starting to see the AIFMD as an opportunity for Europe generally and Luxembourg specifically, and the AIFMD as a brand that could become a worldwide standard.”
Keith O’Donnell, a partner with Atoz, Luxembourg, a tax and corporate financial services company, echoed Cook and Muller’s observations.
“When the alternative directive first came out, initially, I had clients who were saying ‘this is too complicated, if this is what Europe wants, we’re just not going to distribute in Europe, we’ll stop capital-raising in Europe, we’ll just capital raise in the rest of the world. We just don’t want to deal with this.’
“But interestingly, when I was in New York a few weeks ago, I met a client who had been in that camp. Only this time, they came back and they said listen, we’re going to launch a fund, and we don’t think we really can stay out of Europe. So we need to have a discussion about how the directive will apply to us.”
O’Donnell said he thought this made sense.
“As Europeans we tend to have a bit of an inferiority complex [with respect to the US], but if you compare the US market with Europe’s, for example, Europe’s population is greater, by about 20%, and the GDP for the zone is also greater.
I often put the question the other way around: Would it be conceivable for an alternative investment manager to say they won’ raise money in the US?”
