It is a real problem said a London Manager

There are no doubt: London remains the European centre for the industry of "hedge funds", the crisis has changed nothing in the case. According to City of London Corporation, the authority which defends the interests of British financial services, 80 of these European investment vehicles there are still based. Fears of massive relocations of "hedge funds" to the Switzerland or other tax havens expressed in recent months did not materialize. Moreover, "in most some cases of relocation,"hedge funds"have opened offices outside London but there have kept a large part of their teams to avoid drastic decisions," says a London consultant on regulatory issues.

Yet, the admission of Stuart Fraser, issues responsible policies in the City of London Corporation, "the position of the British capital is currently weakened." London is on tenterhooks. When Brevan Howard, the largest "hedge fund" European and BlueCrest, the third, opened offices in Geneva and that the latter Announces have transferred to the channel island of Guernsey headquarters, is not nothing - even if BlueCrest move only a handful of professionals off the coast of Normandy. In the District of Mayfair, Central London, where a large part of the alternative managers have their offices, some representatives is forced almost already that there less over the next years.

Consultation period

Says Stuart Fraser, it is taxation which has, until now, pushed some "hedge funds" to move their teams outside of the City or even to not install. The United Kingdom increased the marginal income tax of 40 to 50 in April and the current Government is not returned to this decision. The team of David Cameron also noted the tax on capital gains from 18 to 28, an aspect which affects especially the industry of the "private equity" (investment in non-listed), but also "hedge funds", by ricochet. For the moment, the towers of Brussels to regulate more screws likely this industry do not actually relocations. "There are too many uncertainties, including on the possibility or non-use of European customers when it is based out of the Union", says Stuart Fraser. But once the uncertainty is removed, the flow of departures could accelerate. The European directive CRD3 on bonuses in finance, that the authority of financial services (FSA) gave the impression late July to quickly translate into English regulation to the surprise and the chagrin of the City-, could have an effect. A comment period is open, which should be completed before early October and the FSA has promised not to be dogmatic.

The problem of the remuneration

But it is possible that many "hedge funds" are subject to the same constraints as the employees of the banks, while the alternative management believes that it has not been saved by taxpayers and that its earnings are its own prerogative. "It is a real problem," said a London Manager. The final form of the AIFM directive on alternative management (read below) could also have an impact. "And how Brussels will impose restrictions on short selling, hedge funds are the main users or not", says a consultant.

Stuart Fraser, financial markets around the world are to aggressive to try to attract "hedge funds". "It is not competition between London and continental seating, but competition between Europe and the rest of the world," he said. Today, according to him, "hedge funders" want to be based in London. And a number of them well-known, as Pierre-Henri Flamand, an ex-French trader for Goldman Sachs, continue to open structures. Because they like the style of life in the English capital.