ECMI Commentaries

Commentaries are short and timely comments on market developments or regulatory developments. We strive to provide our members and the public with a constant flow of these briefs to keep updated with the latest developments in the world of capital markets in Europe. You can download an electronic copy of our policy briefs for free by following the links below.

Implementing the AIFMD: Success or Failure?

This new ECMI commentary considers the implementation of the Alternative Investment Fund Managers Directive (AIFMD) by the European Commission. The AIFMD creates an internal market for asset management and as an endeavour to develop market-based finance is an important piece of legislation for the European economy. The author, Mirzha de Manuel Aramendía, considers the implementation of some of the provisions that raised concern among industry participants. He finds that, on balance, a practical and flexible approach to implementation has been followed that should help secure the success of the framework, which at present is still uncertain. The commentary also considers the remuneration guidelines adopted recently by the European Securities and Markets Authority (ESMA). It encourages EU and national authorities to commit to the success of the AIFMD framework, as part of a broader effort to develop capital markets and reduce the historical reliance of the European economy on bank finance.

Will the PRIPs' KID live up to its promise to protect investors?

ECMI Commentary 33, July 2012: Unveiled by the European Commission on July 3rd, the proposed Regulation on key information documents (KID) for packaged retail investment products (PRIPs) represents a step forward in enhancing the protection of retail investors and advancing the single market for financial services. While acknowledging in this Commentary that the KID is a commendable effort, ECMI/CEPS researcher Mirzha de Manuel Aramendía observes that pre-contractual disclosure is just one of the pieces in the jigsaw puzzle of investor protection and regrets that other pieces, such as MiFID and the IMD, are not so ambitiously constructed.

The Euro Prisoner’s Dilemma

ECMI Commentary 32, February 2012: The last intergovernmental agreement among 25 countries and the ESM Treaty will set the ground for greater institutional coordination on fiscal policies among euro area member states. None of these decisions, however, will be able to pull the euro area out of this crisis. The eurozone is trapped in a classic prisoner’s dilemma. The break-up of the euro remains unlikely but the exit strategy will continue to be led by a sequence of rational (but sub-optimal) decisions, which will make the process long and painful.

The Gloomy Scenario of Italy’s Default

ECMI Commentary 31, December 2011:  This Commentary explores what will happen if Italy is not able to implement structural reforms and if international institutions, such as the EFSF and the IMF, do not intervene with sufficient resources to prevent Europe’s second-largest economy from defaulting on its debt. It warns that the Italian economic system would certainly embark on a perverse path that would follow three phases: liquidity crisis and insolvency; deflationary pressures; and finally inflationary pressures and economic and political instability.

MiFID 2.0 Unveiled

ECMI Commentary 30, November 2011: Although the drafts of MiFID 2.0, published on October 20th, follow largely what had been proposed by the CESR (Committee of European Securities Regulators) and the European Commission, the documents took observers by surprise in both their approach and length. This CEPS Commentary explains how the original legislation has been amended with the principal aim of levelling the playing field and examines its novel features.

Commodity Prices in Boom-and-Bust Cycles

ECMI Commentary 29, June 2011: The sharp and widespread increase in most commodity prices has alarmed the world and raised questions around the sustainability of our economies. As shown in this ECMI Commentary, the reasons for this dramatic rise are multiple, and engaging in a witch-hunt benefits neither the market as a whole nor our economies. Solutions need to be more differentiated and oriented towards two factors: preventing price manipulation (through controls on net positions and on anti-competitive market structures) and fostering sustainability.

The forest of Basel III has too many trees

ECMI Commentary 28, February 2011: Senior Research Fellow Karel Lannoo surveys the radical shift in bank capital requirements confirmed by the new Basel III Accord, with its focus on more and better quality capital, especially for the large banks. He finds, however, that the new framework is becoming very complex, and asks the big question that emerges: how does one determine when a bank is effectively Basel III-compliant, as some will soon start to claim.
 

Third Country Rules for Alternative Investments: Passport flexibility comes at a price

ECMI Commentary 27, December 2010: In critically examining the rules applicable to third country managers and funds contained in the new EU Directive on Alternative Investment Fund Managers (AIFM), Mirzha de Manuel finds in an ECMI Commentary that the rules have gained in flexibility but that regulatory certainty and efficiency have suffered. A preview of this commentary was published by the Financial Times on 13 December 2010.

Where does Europe stand on regulation of alternative investments?

ECMI Commentary 26, September 2010: A new ECMI Commentary by Mirzha de Manuel and Diego Valiante reports on the latest state of play in the negotiations over the Alternative Investment Fund Managers Directive (AIFMD), an important body of EU legislation aimed at ensuring financial stability and greater transparency in areas that have so far remained mostly unregulated. 

Macro-Prudential Regulation (Avinash Persaud)

ECMI Commentary 25, August 2009: This is not the first international banking crisis the world has seen. The previous ones occurred without credit default swaps, special investment vehicles, or even credit ratings. If crises keep repeating themselves, it seems reasonable to argue that policy-makers need to carefully consider what they are doing and not just ‘double-up’ by superficially reacting to the specific features of today’s crisis.

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