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Toward an EU Market-Based Financial System: The Emergence of Credit Alternative Investment Funds

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Alternative Lending

Part of the book series: EBI Studies in Banking and Capital Markets Law ((ESBCML))

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Abstract

The AIF (In Article 4 of the Alternative Investment Fund Managers Directive (AIFMD), the term AIF is defined as any collective investment undertaking, including its sub-funds, which (1) raises capital (2) from a number of investors, (3) with the target to invest this capital for the benefit of these investors (4) following a defined investment policy, and (5) which does not require authorization under Art.5 of UCITSD. For more, see: Dirk Zetsche, The Alternative Investment Fund Managers Directive [Wolter Kluwer, 2012], 40) is a term used to describe a fund comprised by alternative assets, while alternative assets are those which do not belong to traditional investments such as equities, bonds, and cash.

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Notes

  1. 1.

    In Article 4 of the Alternative Investment Fund Managers Directive (AIFMD), the term AIF is defined as any collective investment undertaking, including its sub-funds, which (1) raises capital (2) from a number of investors, (3) with the target to invest this capital for the benefit of these investors (4) following a defined investment policy, and (5) which does not require authorization under Art.5 of UCITSD. For more, see: Dirk Zetsche, The Alternative Investment Fund Managers Directive (Wolter Kluwer, 2012), 40.

  2. 2.

    Lustig Yoram, The Investment Assets Handbook (Harriman House, 2014), 191.

  3. 3.

    Ibid., 192.

  4. 4.

    Hudson Matthew, “Funds,” Wiley, 2014, 2.

  5. 5.

    In an open-ended fund, the investors have the right to redeem their investments periodically. However, the Fund Manager often limits the redemption rights of the investors and thus the investment in HFs could be more illiquid compared to an investment in an UCITS fund. For more, see: Nabilou Hossein, “The Law and Economics of Hedge Fund Regulation: A Comparison Between the U.S. and the EU,” http://amsdottorato.unibo.it/6693/1/Nabilou_Hossein_tesi.pdf (accessed January 2017), 23.

  6. 6.

    LLP is the structure where the general partner is the manager and the limited partners are the institutional or professional investors. Further, the manager often invests its own funds in the fund.

  7. 7.

    Leverage is defined in Art 4 (1) (v) AIFMD as “any method by which the AIFM increases the exposure of an AIF it manages whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means”.

  8. 8.

    Short-selling is the practice of selling securities, which are not owned by the seller. Short-selling is a transaction, where the fund borrows securities from a lender (usually a prime broker or investment bank) under a premium, and sells them to the market, with the target of buying the same securities later at a reduced price. The delivery of the borrowed securities back to the lender completes the transaction. For more, see: IOSCO, “Short Selling and Securities Lending: Issues for Consideration,” http://www.iosco.org/library/pubdocs/pdf/IOSCOPD68.pdf (accessed April 2017), 1ff.

  9. 9.

    Donald R. Chambers, Mark J.P. Anson, Keith H. Black, and Hossein Kazemi, “Alternative Investments,” Third Edition (Wiley, 2015), 381; Smith C. Roy, Walter Ingo, DeLong Gayle, “Global Banking,” Third Edition (Oxford, 2012), 238.; Goldstein v. SEC, 451 F.3d 873, 884 (D.C. Cir. 2006). Another useful definition of the term is an “entity that holds a pool of securities and perhaps other assets, whose interests are not sold in a registered public offering and which is not registered as an investment company under the Investment Company Act,” United States Securities and Exchange Commission, Staff Report to the United States Securities and Exchange Commission on the Implications of the Growth of Hedge Funds (2003), https://www.sec.gov/news/studies/hedgefunds0903.pdf (accessed April 2017), 3.

  10. 10.

    Payne Jenifer, “Private Equity and its Regulation in Europe,” Oxford Legal Studies Research Paper No. 40/2011, http://ssrn.com/abstract=1886186 (accessed April 2017), 3.

  11. 11.

    P. David Stowell, Investment Banks, Hedge Funds and PE, Second Edition (Academic Press, 2012), 315.

  12. 12.

    Ibid.; Payne, supra note 10.

  13. 13.

    Hudson, 89.

  14. 14.

    Iman Anabtawi and Steven Schwarcz, “Regulating Systemic Risk: Towards an analytical Framework,” http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2924&context=faculty_scholarship (accessed April 2017), 1360.

  15. 15.

    Seretakis Alexandros, “Regulating Hedge Funds in the EU? The Case Against the AIFM Directive,” https://ssrn.com/abstract=2447144 (accessed April 2017), 3.

  16. 16.

    World Bank Group, “The role of private equity and debt funds in SME and infrastructure finance,” http://documents.worldbank.org/curated/en/378841468180848281/pdf/101672-WP-PUBLIC-Box394818B-Role-of-PE-DF-in-SME-InfrFin-12-07-15.pdf (accessed February 2017), 10; ESMA, Opinion: Key principles for a European framework on loan origination by funds, April 2016, 1ff.

  17. 17.

    George G. Kaufman, “Bank Failures, Systemic Risk, and Bank Regulation,” 16 CATO J. 17, 21 n.5 at 20.

    (1996).

  18. 18.

    Paul Kupiec and David Nickerson, “Assessing Systemic Risk Exposure from Banks and GSEs Under Alternative Approaches to Capital Regulation,” http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.505.228&rep=rep1&type=pdf (accessed January 2017), 2.

  19. 19.

    Steven Schwarcz, “Systemic Risk,” http://ssrn.com/abstract=1008326 (accessed January 2017), at 198.

  20. 20.

    IOSCO, “Mitigating Systemic Risk- A Role for Securities Regulators: Discussion Paper,” http://www.iosco.org/library/pubdocs/pdf/IOSCOPD347.pdf (accessed January 2017), 10.

  21. 21.

    Ibid.

  22. 22.

    Ibid., 16.

  23. 23.

    Dirk Zetsche, The Alternative Investment Fund Managers Directive (Wolter Kluwer, 2012), 26.

  24. 24.

    FSB and IOSCO, “Consultative Document (2nd): Assessment Methodologies for Identifying Non-Bank Non-Insurer Global Systemically Important Financial Institutions,” March 2015, http://www.fsb.org/wp-content/uploads/2nd-Con-Doc-on-NBNI-G-SIFI-methodologies.pdf (accessed January 2017), 9.

  25. 25.

    IOSCO, supra note 20, 18.

  26. 26.

    Zetsche, 26.

  27. 27.

    IOSCO, supra note 20, 17.

  28. 28.

    FSB and IOSCO, supra note 24, 9.

  29. 29.

    Ibid.

  30. 30.

    Schwarcz, supra note 19, 218f.

  31. 31.

    IOSCO, supra note 20, 20.

  32. 32.

    Ibid., 21.

  33. 33.

    ECB “Hedge Funds and their implications for financial stability,” Occasional paper series, No 34, (August 2005), 28; Charles River Associates, “Impact of the proposed AIFMD across Europe,” 76; FSB and IOSCO, supra note 24, 4.

  34. 34.

    Charles River Associates, 4.

  35. 35.

    Charles River Associates, 79; Finney Denise, “how the Bear Stearns Collapse Affects the Financial Markets,” (March 26, 2008), https://ssrn.com/abstract=1113625 (accessed January 2017), 1.

  36. 36.

    FSB and IOSCO, supra note 24, 4; Zetsche, 27.

  37. 37.

    ECB, supra note 33, 43.

  38. 38.

    IOSCO, supra note 20, 24f; Charles River Associates, 80ff.

  39. 39.

    For example, some derivative and convertible bond markets are highly dependent on hedge fund liquidity. For more, see: Agarwal V, Fung W, Loon Y, Naik N, “Liquidity Provision in the Convertible Bond Market: Analysis of Convertible Arbitrage Hedge Funds,” http://facultyresearch.london.edu/docs/convertarb_Feb2007.pdf (accessed February 2017), 3ff.

  40. 40.

    FSB and IOSCO, supra note 24, 4; Zetsche, 28.

  41. 41.

    European Commission, “Consultation on a possible recovery and resolution framework for financial institutions other than banks,” http://ec.europa.eu/finance/consultations/2012/nonbanks/docs/consultation-document_en.pdf (accessed February 2017), 8f.

  42. 42.

    Niahm Moloney, Eilis Ferran and Jennifer Payne, The Oxford Handbook of Financial Regulation (Oxford, 2015), 314.

  43. 43.

    IOSCO, IOSCO, “Hedge Funds Oversight,” June 2009, http://www.iosco.org/library/pubdocs/pdf/IOSCOPD293.pdf (accessed April 2017), 4.

  44. 44.

    Phoebus Athanassiou, Research Handbook on Hedge Funds. Private Equity and Alternative Investments (Edward Elgar, 2012), 320f.

  45. 45.

    Houman B. Shadab, “Hedge Funds and the Financial Crisis,” http://ssrn.com/abstract=1564847 (accessed February 2017), 3.

  46. 46.

    ECB, supra note 33, 25f.

  47. 47.

    Eilis Ferran, “The Regulation of Hedge Funds and Private Equity: A Case Study in the Development of the EU’s Regulatory Response to the Financial Crisis,” http://ssrn.com/abstract = 1,762,119 (accessed April 2017), 3.

  48. 48.

    Ibid.; IOSCO, “Private Equity: Final Report,” http://www.iosco.org/library/pubdocs/pdf/IOSCOPD274.pdf (accessed February 2017), 11.

  49. 49.

    The de Larosiere Report, http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf (accessed February 2017), 25.

  50. 50.

    The Turner Review: A regulatory response to the global banking crisis, http://www.fsa.gov.uk/pubs/other/turner_review.pdf (accessed February 2017), 72.

  51. 51.

    Zetsche, 29.

  52. 52.

    Report of a CEPS-ECMI Task Force, “Rethinking Asset -Management From Financial Stability To Investor Protection And Economic Growth,” https://www.ceps.eu/publications/rethinking-asset-management-financial-stability-investor-protection-and-economic-growth (accessed February 2017), 30.

  53. 53.

    Iman Anabtawi and Steven Schwarcz, “Regulating Systemic Risk: Towards an analytical Framework,” http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2924&context=faculty_scholarship (accessed February 2017), 12.

  54. 54.

    Athanassiou, 319.

  55. 55.

    Ibid.; Anabtawi and Schwarcz, 9; Zetsche, 29.

  56. 56.

    Federal Reserve Bank of Minneapolis, “An Update on Ending Too Big to Fail,” https://www.minneapolisfed.org/news-and-events/presidents-speeches/an-update-on-ending-too-big-to-fail (accessed March 2017).

  57. 57.

    ESRB, “Is Europe Overbanked?” https://www.esrb.europa.eu/pub/pdf/asc/Reports_ASC_4_1406.pdf (accessed March 2017), 4.

  58. 58.

    WSBI and ESBG, “Financial Systems in Europe and in the US: Structural Differences where Banks Remain the main Source of Finance for Companies,” http://www.savings-banks.com/press/latest-news/Pages/EU-US-financing-companies-study.aspx (accessed March 2017), 4.

  59. 59.

    ECB, “Survey on the Access to Finance of Enterprises in the euro area,” https://www.ecb.europa.eu/pub/pdf/other/accesstofinancesmallmediumsizedenterprises201611.en.pdf?862f53698b8f84e198d67572453c4465 (accessedaccessed March 2017), 12.

  60. 60.

    ESRB, supra note 57.

  61. 61.

    ECB, “ECB publishes Consolidated Banking Data for end-September 2016,” https://www.nbb.be/doc/cp/eng/2017/pressrelease170214.pdf (accessed March 2017).

  62. 62.

    The shadow banking industry can be defined as credit intermediation involving entities and activities outside of the regular banking system. The industry contributes to the financing of the real economy, but it can be a source of systemic risk, especially when they are structured to perform bank-like functions (such as direct lending) and when their interconnectedness with the regular banking system is strong. For more see: FSB, “Global Shadow Banking Monitoring Report 2015,” 1ff. Another definition is provided by the IMF: shadow banking is the “financing of banks and nonbanks financial institutions through noncore liabilities, regardless of the entity that carries it out”. For more see: IMF, “Global Financial Stability Report: Risk Taking, Liquidity, and Shadow Banking,” October 2014, 68ff.

  63. 63.

    ESRB, “EU Shadow Banking Monitor,” No 1/July 2016, 3ff.

  64. 64.

    FSB, “Global Shadow Banking Monitoring Report 2015,” 1ff.

  65. 65.

    ESRB, “EU Shadow Banking Monitor,” No 1/July 2016, 3; ECB, “Report on Financial Structures,” October 2016, 53.

  66. 66.

    ECB, “Towards a framework for calibrating macroprudential leverage limits for alternative investment funds,” Financial Stability Review, November 2016, 123.

  67. 67.

    ESRB, supra note 57, 35.

  68. 68.

    ECB, “Bank Bias in Europe: effects on systemic risk and growth,” No 1797/May 2015, 19.

  69. 69.

    ESRB, supra note 57, 35.

  70. 70.

    Mark Roe, “Structure Corporate Degradation Due to Too-Big-to-Fail Finance,” University of Pennsylvania Law Review 162 (2014), 1419 at 1426 and 1441.

  71. 71.

    ESRB, supra note 57, 36f.

  72. 72.

    ECB, supra note 68, 21.

  73. 73.

    Ibid.

  74. 74.

    Philip Lane and Peter McQuade, “ECB Working Papers: Domestic Credit Growth And International Capital Flows,” https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1566.pdf?a95537eedcb2aaf27f7f34fb39ceaa44 (accessed March 2017), 2ff and 8.

  75. 75.

    ECB, supra note 68, 21.

  76. 76.

    Countries get the banking system that their political institutions will permit. Charles W. Calomiris and Stephen H. Haber, Fragile by Design: The Political Origins of Banking Crises and Scarce Credit (Princeton University Press, 2014), Section 1.

  77. 77.

    ESRB, supra note 57, 39.

  78. 78.

    Anat Admati and Martin Hellwig, The Bankers’ New Clothes (Princeton University Press, 2013), Chapter 13, 213.

  79. 79.

    Harald Hau, and Marcel P. Thum., “Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany,” 2009, https://sites.insead.edu/facultyresearch/research/doc.cfm?did=44430 (accessed April 2017), 4.

  80. 80.

    For more see: uis Garicano, “Five lessons from the Spanish Cajas Debacle for a New Euro-Wide Supervisor,” 2012, http://voxeu.org/article/five-lessons-spanish-cajas-debacle-new-euro-wide-supervisor (accessed April 2017); ECB, supra note 33, 22.; Nadège Jassaud, “Reforming the Corporate Governance of Italian Banks”. 2014, IMF Working Paper 14/181, especially where he describes the foundation-controlled banks, such as Monte dei Paschi di Siena, and their influence from the political sector, 6ff.

  81. 81.

    In the case of the Dutch bank ABN Amro’s bid for the acquisition of Banca Antovenetta, the governor of Bank of Italy, Antonio Fazio, searched for an Italian bank to act as a counter-bidder and purchase Bance Antovenetta. Gianpiero Fiorani, who was the president of banca Popolare di Lodi, made a bid and Fazio used all his regulatory powers in favor of the Fiorani’s bid. Fiorani managed to take over Antonveneta and block ABN Amro, but in the summer of 2005, their cooperation was revealed. In November 2005, Italy found itself the subject of legal enforcement action by the EU Commission for breach of European law in relation to Antonveneta case. For more see: Dermot Mckann, The Poltical Economy of the European Union (Policy Press, 2010), 127; Nicolas Véron, “Banking Nationalism and the European Crisis,” 2013, http://bruegel.org/2013/10/banking-nationalism-and-the-european-crisis/ (accessed April 2017).

  82. 82.

    Sigridur Benediktsdottir, Jon Danielsson, and Gylfi Zoega, “Lessons from a Collapse of a Financial System,” 2011, https://www.tcd.ie/Economics/assets/pdf/version-20-ben-dan-zoega-revised.pdf (accessed April 2017), 11ff.

  83. 83.

    Emilios Avgouleas, “Regulating Financial Innovation,” The Oxford Handbook of Financial Regulation, 2015, 660; Daniel Awrey, “Complexity, Innovation and the Regulation of Modern Financial Markets,” Harvard Business Law Review 2 (2012), 236–294, at 258f.

  84. 84.

    Bank of England created in 1693 the first official governmental bond to fund a war against France. See Jared Cummans, “A Brief History of Bond Investing,” http://bondfunds.com/education/a-brief-history-of-bond-investing/ (accessed April 2017).

  85. 85.

    London Stock Exhange, “Our History,” http://www.londonstockexchange.com/products-and-services/rns/history/history.htm (accessedaccessed April 2017).

  86. 86.

    Avgouleas, supra note 112, 662; High Frequency Trading is “an innovative trading technology. It is a form of algorithmic trading or automated trading based on sophisticated computer technology which dictates trading decisions and which takes advantage of arbitrage opportunities….It is driven by computer programs which interpret market signals and execute related trading strategies, and deploying high frequency orders, in order to take advantage of very short duration arbitrage opportunities,” Niahm Moloney, EU Securities and Financial Markets Regulation, Third Edition (Oxford), 526; Another definition which I think is the most clear is: “HFT is not a trading strategy as such but applies the latest technological advances in market access, market data access, and order routing to maximize the returns of established trading strategies. Attributes of HFT often include the following: a) use of extraordinarily high-speed programs for generating, routing, and executing orders; b) use of ‘co-location’ services and individual data feeds offered by exchanges and others to minimize network and other types of latencies [….]; c) very short time frames for establishing and liquidating positions; d) submission of numerous orders that are canceled shortly thereafter; e) ending the trading day in as close to a flat position as possible,” For more see: PWC, “An objective look at high-frequency trading and dark pools,” https://www.pwc.com/us/en/pwc-investor-resource-institute/publications/assets/pwc-high-frequency-trading-dark-pools.pdf (accessed April 2017).

  87. 87.

    Securitization is the process which permits a credit originator, usually a bank, to finance several loans/assets by transforming illiquid assets into tradable securities in which others may invest. The bank (the originator) sells the assets/loans to a legally separate entity, known as special purpose vehicle (SPV), which purchases the assets with funds raised by issuing asset-backed securities (ABS) and by selling these securities to investors. (The assets behind the ABS are the assets sold to the SPV, thus the loans.) The periodical payments to investors by the cash flows generated by the underlying assets is the last step in this complex process. For more see Moorad Choudry, Structured Credit Products, Second Edition (Wiley, 2010), 406; European Commission, “European Framework for simple and transparent Securitisation,” http://europa.eu/rapid/press-release_MEMO-155733_en.htm?locale=en (accessed April 2017); Phillip Wood, The Law and Practise of International Finance, University Edition, Sweet and Maxwell, 2007, 28-01f.

  88. 88.

    Anat Admati and Martin Hellwig, The Bankers’ New Clothes (Princeton University Press, 2013), 57.

  89. 89.

    Ibid., 58.

  90. 90.

    A derivative is a financial contract that derives its value from an underlying asset. In 2016, 25 billion derivative contracts were traded. For more see: Kimberly Amadeo, “What Are Derivatives?” https://www.thebalance.com/what-are-derivatives-3305833 (accessed April 2017).

  91. 91.

    ESRB, supra note 57, 41.

  92. 92.

    Avgouleas, supra note 83, 668.

  93. 93.

    ESRB, supra note 57, 41; Haldane G Andrew, “Financial arms races,” Speech by Mr Andrew G Haldane, Executive Director, Bank of England, at the Institute for New Economic Thinking, Berlin 2012, http://www.bis.org/review/r120426a.pdf (accessed April 2017).

  94. 94.

    ECB, supra note 61; ECB, supra note 66.

  95. 95.

    ECB, “The Euro Area Bank Lending Survey,” January 2017, https://www.ecb.europa.eu/stats/pdf/blssurvey_201701.pdf?6c44eff3bac4b858969b9cb71bd4a8fa (accessed April 2017), 8.

  96. 96.

    ECB, “Survey on the Access to Finance of Enterprises in the Euro Area,” November 2016, https://www.ecb.europa.eu/pub/pdf/other/accesstofinancesmallmediumsizedenterprises201611.en.pdf?862f53698b8f84e198d67572453c4465 (accessed April 2017), 17ff; ESMA, “Key Principles for a European Framework on Loan Origination by Funds,” ESMA/2016/596, 2f.

  97. 97.

    ECB, supra note 68, 23.

  98. 98.

    “Institutional Investors are all the entities which, with different objectives, professionally manage portfolios of financial and real assets on behalf of a plurality of investors”. The following can be considered as institutional investors: (a) collective investment vehicles (CIVS); (b) Individual portfolio management; (c) insurance companies; d) pension funds; (e) institutions for occupational or personal retirement provisions; (f) foundations and endowments. For more see: Basile Ignazio and Ferrari Pierpaolo, Asset Management and Institutional Investors, Springer, 2016, 3f.

  99. 99.

    EU Commission, “Capital Requirements-CRD IV/CRR- Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-13-690_en.htm?locale=en (accessed April 2017), 1. Context.

  100. 100.

    EU Commission, “What Is the Banking Union?” https://ec.europa.eu/info/business-economy-euro/banking-and-finance/banking-union/what-banking-union_en (accessed April 2017); ECB, “Single Supervisory Mechanism,” https://www.bankingsupervision.europa.eu/about/thessm/html/index.en.html (accessed April 2017).

  101. 101.

    EU Commission, “Capital Requirements-CRD IV/CRR- Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-13-690_en.htm?locale=en (accessed April 2017), 1. Context.

  102. 102.

    EU Commission, supra note 100.

  103. 103.

    Stefan Grundmann and Hans-W Mickitz, The European Banking Union: Beacon for Advanced Integration or Death-Knell for Democracy? (Oxford: Hart Publishing, 2019), 90–91.

  104. 104.

    EU Commission, “Banking Union: Restoring Financial Stability in the Eurozone,” http://europa.eu/rapid/press-release_MEMO-15-6164_en.htm?locale=en (accessed April 2017).

  105. 105.

    Regulation (EU) No 575/2013 Of The European Parliament And Of The Council of 26 June 2013 On Prudential Requirements For Credit Institutions and Investment Firms And Amending Regulation (EU) No 648/2012.

  106. 106.

    Directive 2013/36/EU Of The European Parliament And Of The Council of 26 June 2013 On Access To The Activity Of Credit Institutions And The Prudential Supervision Of Credit Institutions And Investment Firms, Amending Directive 2002/87/EC And Repealing Directives 2006/48/EC And 2006/49/EC.

  107. 107.

    “The Basel Committee on Banking Supervision (BCBS) is the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability”. For more see: BIS, “Basel Committee Charter,” http://www.bis.org/bcbs/charter.htm (accessed April 2017).

  108. 108.

    Basel Committee on Banking Supervision (BSBS), “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems,” http://www.bis.org/publ/bcbs189.pdf (accessed April 2017).

  109. 109.

    “Capital ratio is the relationship (ratio) between capital and lending (risk weighted assets)”. For more see: Stephen Valdez and Philip Molyneux, An Introduction to Global Financial Markets, Seventh Edition, 2013, 275.

  110. 110.

    BSBS, supra note 106, 12; EU Council and Council of the European Union, “Capital Requirements for the Banking Sector,” http://www.consilium.europa.eu/en/policies/banking-union/single-rulebook/capital-requirements/ (accessed April 2017).

  111. 111.

    Emilios Avgouleas, Governance of Global Financial Markets (Cambridge, 2012), 332.

  112. 112.

    BSBS, supra note 106, 8; EU Council and Council of the European Union, supra note 109.

  113. 113.

    EU Commission, “Capital Requirements-CRD IV/CRR- Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-13-690_en.htm?locale=en (accessed April 2017), 2 BASEL III, CRD IV AND INTERNATIONAL LEVEL PLAYING FIELD.

  114. 114.

    Ibid., 10. CAPITAL BUFFERS; BSBS, supra note 106, 5 and 54ff.

  115. 115.

    EU Commission, supra note 112.

  116. 116.

    Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions; ECB, “Single Supervisory Mechanism,” https://www.bankingsupervision.europa.eu/about/thessm/html/index.en.html (accessed April 2017).

  117. 117.

    EU Commission, “Banking Union: restoring financial stability in the Eurozone,” http://europa.eu/rapid/press-release_MEMO-15-6164_en.htm?locale=en (accessed April 2017); ECB, “Questions and answers for the public consultation on the draft ECB SSM framework regulation,” https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/framework/ssm-consultation-qa.en.pdf?5c3df58be6946a30fa2cec38e47db0b6 (accessed April 2017).

  118. 118.

    EU Commission, “Legislative package for banking supervision in the Eurozone—Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-13-780_en.htm (accessed April 2017),

  119. 119.

    EU Commission, “EU Bank Recovery and Resolution Directive (BRRD): Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-14-297_en.htm (accessed April 2017).

  120. 120.

    DIRECTIVE 2014/59/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council.

  121. 121.

    EU Commission, “A Single Resolution Mechanism for the Banking Union- FAQ,” http://europa.eu/rapid/press-release_MEMO-14-295_en.htm (accessed April 2017).

  122. 122.

    EU Commission, “New crisis management measures to avoid future bank bail-outs,” http://europa.eu/rapid/press-release_IP-12-570_en.htm?locale=en (accessed April 2017).

  123. 123.

    EU Commission, “EU Bank Recovery and Resolution Directive (BRRD): Frequently Asked Questions,” http://europa.eu/rapid/press-release_MEMO-14-297_en.htm (accessed April 2017).

  124. 124.

    EU Commission, “New crisis management measures to avoid future bank bail-outs,” http://europa.eu/rapid/press-release_IP-12-570_en.htm?locale=en (accessed April 2017).

  125. 125.

    Ibid.

  126. 126.

    EU Council, “Conclusions,” http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/134353.pdf (accessed April 2017), 4.

  127. 127.

    Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010.

  128. 128.

    European Council and Council of the European Union, “Single Resolution Mechanism,” http://www.consilium.europa.eu/en/policies/banking-union/single-resolution-mechanism/ (accessed April 2017); EU Commission, “A Single Resolution Mechanism for the Banking Union—FAQs,” http://europa.eu/rapid/press-release_MEMO-14-295_en.htm (accessed April 2017).

  129. 129.

    EU Commission, “Green Paper: Building a Capital Markets Union,” COM (2015) 63 final, 2; EU Commission, “Action Plan on Building a Capital Markets Union,” COM (2015) 468, 3f.

  130. 130.

    Nicolas Veron and Guntram B. Wolff, “Capital Markets Union: A Vision for the Long Term,” Journal of Financial Regulation 0 (2016), 1–24, at 3.

  131. 131.

    Jean-Claude Juncker, “A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change, Opening Statement in the European Parliament session (European Commission,” Strasbourg, 15 July 2014), http://www.eesc.europa.eu/resources/docs/jean-claude-juncker---political-guidelines.pdf (accessed April 2017), 4.

  132. 132.

    EU Commission, “Action Plan on Building a Capital Markets Union,” COM (2015) 468, 3ff.

  133. 133.

    Ibid., 10.

  134. 134.

    IMF, “Global Financial Stability Report: Risk Taking, Liquidity, and Shadow Banking,” October 2014, 74ff. In Lending AIFs are included all the AIFs which employ direct lending strategies and direct lending funds per se.

  135. 135.

    IOSCO, “SME Financing through capital markets,” FR11/2015, July 2015, 20f.

  136. 136.

    AIMA, “Financing the economy 2015: The role of alternative asset managers in the non-bank lending environment,” https://www.aima.org/article/financing-the-economy-the-role-of-alternative-asset-managers-in-the-non-bank-lending-environment-aima-research.html (accessed April 2017), 4f.

  137. 137.

    Prequin, “European Direct Lending: Fundraising and Investor Outlook,” https://www.preqin.com/docs/newsletters/pd/Preqin-PDSL-May-16-European-Direct-Lending.pdf (accessed April 2017), 2. To give a better image of the global industry, at international level, 153 lending AIFs managed to raise, in 2015, almost $96bn of capital. In 2016, 76 direct lending AIFs raised $76bn, and in 2017, there are 287 lending AIFs in market targeting an aggregate of $127bn. This increase in the quantity of the funds and in the capital raised gain more in importance, if someone considers that since 2010, only 3 new banks were created in the US, when until 2010, there were created 146 new banks each year on average. For more see: Prequin, “Privat Debt: Spotlight,” February 2017, https://www.preqin.com/docs/newsletters/pd/Preqin-Private-Debt-Spotlight-February-2017.pdf (accessed April 2017), 4; Heather Long, “Weird: Only 3 New U.S. Banks Opened Since 2010,” http://money.cnn.com/2015/07/29/investing/dodd-frank-new-banks/ (accessed April 2017); Stacy Mitchel, “Number of New Banks Created by Year, 1993 to 2013,” https://ilsr.org/number-of-new-banks-created-by-year-1993-to-2013/ (accessed April 2017).

  138. 138.

    AIMA, “Financing the Economy 2015: The Role of Alternative Asset Managers in the Non-bank Lending Environment,” https://www.aima.org/article/financing-the-economy-the-role-of-alternative-asset-managers-in-the-non-bank-lending-environment-aima-research.html (accessed April 2017), 5 and 22.

  139. 139.

    Mitchel Max for ICG, “The Rise and Rise of Direct Lending,” http://www.icgam.com/SiteCollectionDocuments/ICG%20Dec%2014%20Commentary.pdf (accessed April 2017).

  140. 140.

    ECB, “Lending Survey,” January 2017, https://www.ecb.europa.eu/stats/pdf/blssurvey_201701.pdf?6c44eff3bac4b858969b9cb71bd4a8fa (accessed April 2017), 3.

  141. 141.

    ECB, “Lending Survey,” April 2017, https://www.ecb.europa.eu/stats/pdf/blssurvey_201704.pdf?ae4008c7f33e40f7e4eed7ed48a5ad51 (accessed April 2017), 3.

  142. 142.

    Ibid., 4.

  143. 143.

    ESRB, “EU Shadow Banking Monitor,” No 1/July 2016, 4.

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    Promitheas Peridis

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Peridis, P. (2022). Toward an EU Market-Based Financial System: The Emergence of Credit Alternative Investment Funds. In: Alternative Lending. EBI Studies in Banking and Capital Markets Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-13471-5_2

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