Case 2: Hedge funds and financial markets Task: 1. What are hedge funds? 2. Hedge fund business and regulation 2. Role of hedge funds in the market and their impact in crises

Topics and Issues Legal Aspects of Finance 2 Hedge funds Legal and economic structure Leveraging and use of derivatives Hedge funds regulation and supervision Targets of regulation Is regulation needed? Should risky products be regulated specially? Role of hedge funds and their impact on crises The importance (if any) of hedge funds Can hedge funds cause or exacerbate crises – or help to cure them? Legal Aspects of Finance 2

Regulation Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010, Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision Legal Aspects of Finance 2

Other Material and Further Reading Aatu Kokkila, AIFMD Impact on European Hedge Fund Industry (unpublished Master’s thesis. Aalto university School of business, Business Law 2016; to be found on the Additional reading subpage of the course Legal Aspects of Finance). ZUFFEREY, J.-B.: Regulation of Trading Systems on Financial Markets (1997). ISBN 90-411-0679-0 Please make use of your knowledge of Finance Legal Aspects of Finance 2

Case 2: Slides Slide sets: 1 – 5, 9, 12; especially set 2 On legal liabilities: sets 8 and 8a