Why did the European Union decide to regulate hedge fund managers in through the directive on Alternative Investment Fund Managers? This paper tackles this key question in the multi-level governance of financial services by testing a variety of theoretically-informed explanations against the empirical record. The research dismisses a 'functional' explanation, which would consider the EU's decision to regulate hedge fund managers purely as a rational response to the global financial crisis, as well as 'systemic' explanations, which would argue that this regulatory agenda was push forward by policy-makers outside the EU (eg US or international organisations). By contrast, it is argued that a 'market-shaping' regulatory paradigm have been gaining ground in the EU regulatory space as a consequence of the financial crisis, empowering the coalition of forces sponsoring that paradigm, and silencing the 'market-making' regulatory paradigm advocated by the competing coalition. The EU has also attempted to export some tenets of its regulatory paradigm to other jurisdictions.
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