The past year has been mixed for alternative funds. In the hedge fund space, industry assets under management increased by $70 billion to $3.22 trillion, despite lackluster overall returns and noisy withdrawals by certain institutional investors. In the private equity space, industry assets under management grew 4.2 percent to $2.49 trillion, and 8,975 new funds were launched. Regulatory requirements and investor preference for established managers have increased barriers to entry in both sectors. Meanwhile, competition for investor capital has created a buyer’s market with significant negotiation of fund terms.

Click here to read this article in which partner Stephanie Breslow and associate Patrick Dundas discuss current industry trends affecting hedge and investment funds and provide information regarding regulatory developments impacting the market.

From 1 March 2017, the new variation margin rules for over-the-counter derivatives contained in the regulatory technical standards adopted by the European Commission will apply to certain European counterparties.

In anticipation of the 1 March deadline, European counterparties (and any non-EU entities, including funds, that trade with European financial institutions) are in the process of putting in place appropriate risk management procedures and compliant netting and collateral documentation to implement the new VM requirements.

Click here to read more about these developments.

Fund managers and investors should be aware that new Norwegian short selling rules are expected to come into force on 1 Jan. 2017 (the ‘New Rules’). The New Rules are Norway’s implementation of European Union (‘EU’) Regulation No 236/2012 on short selling and certain aspects of credit default swaps (the ‘Short Selling Regulation’).[1] This Alert provides a summary of the new short selling disclosure rules that fund managers and investors need to consider. Fund managers should be aware that EU regulators have, over the past two years, taken a number of enforcement actions against buy-side firms for breaches of disclosure obligations under the Short Selling Regulation (including in the case of missed or late filings).

Click here to read more about the new disclosure obligations in respect of net short positions.

The European Securities and Markets Authority (‘ESMA’) published its first set of advice to the European Parliament, the Council and the Commission in July 2015 on the extension of the AIFMD marketing passport to six non-EU countries (Guernsey, Hong Kong, Jersey, Switzerland, Singapore and the United States).

Click here to read more.

On 23 June 2016, the British public voted to leave the European Union after 43 years of membership. Although the results of the referendum are not binding in law and there remains a possibility of a constitutional challenge, the early indications from Prime Minister Theresa May and leading figures within the ruling Conservative Party are that the United Kingdom will proceed with the so-called Brexit.

Click here to read this article, in which SRZ partners Christopher Hilditch and Anna Maleva-Otto consider how Brexit might affect alternative asset managers in the United Kingdom and the United States.

As the hedge fund regulatory landscape evolves, U.K. regulators’ areas of scrutiny are in many cases similar to those of U.S. regulators, though with some differences of emphasis, detail and modus operandi. The key regulatory risk factors for U.K. hedge fund managers currently include outdated documents, general complacency, insufficient accountability and attempts at transferring responsibility to other service providers.

Click here to read the article in which The Hedge Fund Journal talks to partners Christopher Hilditch and Anna Maleva-Otto about these regulatory risk factors for U.K. hedge fund and alternative investment managers.

Over the past year, there have been regulatory actions that implement or modify the risk retention regulations and requirements applicable to collateralized loan obligations (“CLOs”) in both the U.S. and the EU. In light of these regulatory changes, CLO managers have developed legal structures to enable them to comply with risk retention requirements.

Click here to read this chapter, published in the 2016 edition of The International Comparative Legal Guide to: Securitisation, in which SRZ partners Craig Stein and Paul N. Watterson, Jr. review the U.S. and EU risk retention requirements and discuss the challenges facing CLO managers in complying with the requirements. SRZ partner Anna Maleva-Otto assisted in the preparation of this chapter.

In this SRZ Insights video, SRZ associate Ron Feldman shares what fund managers need to know about the new Securities Financing Transactions Regulation, which is an EU regulation and applies directly in each EU Member State without the need for local implementing legislation. Ron reviews the scope and requirements of the SFT Regulation, including record-keeping requirements, disclosure obligations and transaction reporting.


Regulation (EU) 2015/2365 on Transparency of Securities Financing Transactions and of Reuse (the ‘SFT Regulation’) has been published in the EU Official Journal and applies from 12 January 2016. As an EU regulation, it applies directly in each EU Member State without the need for local implementing legislation.

Click here to continue reading.