British government fears EU hedge fund regulations


British parliament has hit out at EU plans to regulate hedge fund managers. The worry is that the current regulations may limit investor options and prove to be a bane on Europe’s economy.

Last April the EU established that all hedge fund managers must fall in line with leverage caps, fully disclose all matters to higher-ups and also work in tandem with independent valuers.

The EU is hoping to make the entire financial world a bit clearer following the crisis that is still affecting the world’s economy. Britain is the central hub of Europe’s private equity and hedge fund activity with almost 50,000 people working in the sector. A report by the House of Lords didn’t have an issue with the thought behind the law but did exclaim that the hedge-fund market was not to blame for the financial woes the world suffered.

The main issues lie with the restrictions that the law forces on to managers who are interested in marketing non EU funds: "We believe that the government should not agree the directive unless it is compatible with equivalent legislation with regulatory regimes in third countries and in particular in the United States, in order to avoid a situation in which alternative investment fund managers lose competitiveness at a global level. We recommend that the government seek to tailor the directive in a way that respects the differences between the types of funds it covers. A possible solution could be to establish broad principles in the directive” stated the report.

The laws were rushed in to place last year as the European Parliament applied a large amount of pressure to have to legislation fast-tracked. This has led to the report stating that had the draft been subject to greater attention over more time then some of the creases could have been ironed out before it was passed. The report went on to say that as the cash-crisis set in the EU began to look at hedge-funders as “villains”.

The amendments that are being asked for would allow managers to utilise non EU funds and other foreign depositories, these changes are now being deliberated over in Brussels and the final say will come down to the European Parliament.