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AIMA Journal Q310

AIMA Journal Q310

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Published by: http://besthedgefund.blogspot.com on Dec 04, 2010
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Alternative Investment Management Association
AIMA Junal
The Global Forum for the Global Alternative Investment Management Industry
Q3 2010 www.aima.g N. 84
e have heard a lot about speculation recently. Whetherit has been commodities, the Euro, or sovereign debt,policymakers and self-appointed experts have queuedup to attack “speculators” whose speculation is allegedly ruiningmarkets and bringing down currencies and economies.The rhetoric has been pretty tough. Some leaders talked of Europebeing “under attack” from speculators. During the sovereignCDS crisis there were even reports that the intelligence services
of various European states had been told to nd out who the
speculators were. One Greek newspaper reported that the Greekintelligence services had managed to “unravel the strands of
speculation entangling the country,” and that they had identied
the British and American sellers of Greek bonds.Perhaps they would have been better employed looking closer tohome. It has since emerged that some of the biggest buyers ofprotection in the Greek sovereign CDS market were Greek banks.Who were the other big players in Greek debt? French and Germanbanks. In fact 95% of Greek debt is held inside the Eurozone (i.e notin the UK and US). So much for “Anglo-Saxon” speculation.It’s all too easy to attack “speculation” because it is almostimpossible to differentiate between speculation and tradingin general. In fact the very use of the word “speculation”misunderstands the marketplace. Who in the marketplace is not
there to prot? Either everyone in the marketplace is a speculator
or the distinction is meaningless.Unfortunately, policymakers have used “speculators” as ascapegoat to be blamed for any ill, regardless of the facts. And norhas their rhetoric been merely empty threats. There have alreadybeen very real examples of action taken – such as the recentunilateral German ban on naked short-selling. All this mattersbecause when policymakers talk publicly about “speculators”
they’re not talking about all nancial market participants.
They’re not even talking about the banks. They usually mean us– the global hedge fund industry.There is a way to neutralise ignorant and prejudiced attacks likethese, and it is education. Making people understand that ourindustry is not part of the problem, but part of the solution.Showing them that we genuinely contribute to the economies inwhich we operate and to the global economy as a whole. Not only interms of delivering returns to investorsand price-discovery and liquidity tomarkets, although that is important,but in real tangible terms that peoplereally understand.Jobs are one important example of that, but perhaps even moreimportant is the social dimension - the industry now is the guardianof many people’s pensions and savings and is the facilitator oftheir business loans and mortgages. In many instances it is hedgefund activity that enables pension funds, insurers and banks tooffer the services that they do because they are niche operatorscapable of assessing and taking on risks that others are unwillingor unable to undertake.Ultimately the best antidote to attacks on “speculation” is to
demonstrate the social utility of nancial services in general and
our industry in particular. Ifour industry is perceived bypolicymakers as rich peopleusing borrowed money tomake more money for otherrich people then they will nothesitate to impose punitiveregulation. If they understandthat we are a vibrant, creativeand indivisible part of the assetmanagement sector delivering
real and important benets to
society, they might think twice.AIMA, as the global industry body,is at the forefront of activitieson behalf of the industry todemonstrate the importanceand relevance of what we all do.We seek to provide a forum forall communications professionalsin the industry to discuss andcoordinate messaging so thatwe can deliver on our missionto educate. Please do contactour team if you’d like tobe involved.
Speculation and social utility
Anw Bak
Chief Executive Ofcer, Alternative InvestmentManagement Association
Address froM the Ceo
2 AIMA Journal Q3 2010
The AIMA Journal is published quarterly by the Alternative Investment Management Association Ltd (AIMA). The views and opinions expressed do not necessarily reect those of the AIMA Membership. AIMA does not accept responsibility for any statements herein. Reproduction of part or all of the contents of this publication is strictly prohibited, unless prior permission is given by AIMA.© The Alternative Investment Management Association Ltd (AIMA). All rights reserved.
Congratulationsto AIMA on its20th anniversary
Simmons & Simmonsis proud to be aSponsoring Memberof AIMA
Simmons & Simmons has a highly specialised international assetmanagement and investment funds team. Across the globewe advise on the full range of legal and regulatory issues forparticipants in the asset management industry.
Acknowledged by the Legal 500 UK directory as the leading firm for hedge funds, thestrength of Simmons & Simmons’ practice has also been recognised in a number of awardsincluding the Funds Europe Award ‘European Legal Adviser of the Year’ 2006 to 2009inclusive, The Hedge Fund Journal Award ‘Best Law Firm’ in 2007 and 2008, Global InvestorAwards ‘Legal Firm of the Year’ in 2008 and 2010 and HFM European Hedge Fund ServicesAwards 2010 ‘Best Law Firm’.
To discuss how we can help your business, contact Iain Cullen or your usualcontact at Simmons & Simmons.
Iain Cullen
T+44 20 7825 4422Eiain.cullen@simmons-simmons.com

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