Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
The Independent – Grimly aware that a European Commission crackdown on regulation of hedge funds and private equity spells disaster for the EU’s predominantly London-based industry, Treasury ministers have been desperately lobbying their counterparts in Brussels for months, but their pleas have fallen on deaf ears.
Now, however, the Americans have woken up to the fact that many of their hedge funds would find it impossible to do business in the EU under proposals for regulatory reform. In recent weeks, US Treasury officials have thus been touring the EU, letting their displeasure be known.
It appears that the Americans’ involvement is already paying dividends. Sweden, which holds the EU presidency, was quietly letting it be known yesterday that it will ensure some sort of compromise is brokered. The Alternative Investment Management Association, which represents the sector’s interests, now thinks disaster may be averted.
Telegraph.co.uk – The City is staring into the abyss. If the proposed EU directive on hedge funds goes through, London will go the way of Bruges, Venice and Amsterdam: a once dominant financial entrepôt sidelined by more virile cities.
This, of course, is precisely what some in the EU want. I have lost count of how often I’ve heard voices raised in Brussels against London’s “jungle capitalism”. In the eyes of many Continental politicians, the Square Mile is parasitical: a lawless free city, whose lax regulations caused the financial crisis. They deeply resent the fact that 80 per cent of managed equity and hedge funds are based in London.
Wealth Bulletin – Paul Myners has vowed to fight “tooth and nail” to revise a directive from Brussels that would give the European Union the power to set limits on how much hedge funds are allowed to borrow.
The draft legislation has triggered panic in the industry and prompted several senior figures to threaten to leave London unless the legislation is radically altered.
Myners will meet Sweden’s deputy finance minister in 10 days to seek changes to the directive, as Sweden prepares to take over the EU chair from Czech Republic on July 1.
Bloomberg – Hedge fund managers who run the largest 15 percent of portfolios in the European Union would have to report risks, debts and trading activities to regulators under a draft proposal to tighten oversight after the financial crisis.
The EU’s executive agency in Brussels is weighing plans to regulate “alternative investment fund managers” who oversee at least 250 million euros ($333 million). The measure also covers private-equity buyout firms.
The proposal answers calls from EU lawmakers for rules on all market actors, and from the Group of 20 nations for oversight of hedge funds large enough to put financial systems at risk. While the proposal, which may still be changed, excludes 85 percent of hedge fund managers, it would leave out 24 percent of their assets in the region, according to the commission.
Forbes – EU leaders meeting in Brussels on Thursday and Friday will discuss action on the financial crisis, with concern expressed that some eastern European countries may need more help.
Earlier this month G20 finance ministers laid out a broad framework for regulatory reform and repairing the financial system at meetings this weekend.
Reuters – Hedge funds in the European Union will be regulated following a public consultation that is currently underway, a senior EU official said on Wednesday.
"On hedge funds, we have used as our basis that they must be regulated," EU Economic and Monetary Affairs Commissioner, Joaquin Almunia told the European Parliament.
On Monday the bloc’s internal market commissioner, Charlie McCreevy, launched a public consultation on whether hedge funds needed more oversight but stopped short of saying if there will be regulation or a softer approach, such as an industry code.
Straits Times – EU nations on Monday reached a compromise agreement on new rules to cut CO2 emissions from new cars from 2012, with penalties for automakers who fail to comply, a negotiator said.
The deal, part of wider EU efforts to tackle global warming, was reached during talks between representatives of the 27 EU nations, the European parliament and the European Commission, following months of detailed and sometimes heated negotiations.
‘It isn’t the commission’s initial proposal, but there is some compensation thanks to a (new) long-term objective’ on cutting emissions and ‘with very strong penalties’ for non-compliance, the source said.
Sydney Morning Herald – The hedge fund industry says it supports federal government plans to ban naked short selling and impose a disclosure regime for covered short selling.
The Australian arm of the Alternative Investment Management Association (AIMA) said the group had been in talks with regulators and the federal government about legislation to go to parliament on Thursday.
But while it supported the naked short selling ban, moves to create greater transparency of covered short selling activity on the Australian stock exchange did not go far enough.
Reuters – Hedge funds and private equity funds should be monitored closely but there are no plans to propose regulation, a top European Commission official said on Monday, sparking anger from left wing lawmakers.
It has been the heavily regulated sector of the financial services industry, including banks, that has been allowed to "run amok with little-understood securitization vehicles," EU Internal Market Commissioner Charlie McCreevy told the European Parliament.
"I don’t believe it is necessary at this stage to tar hedge funds and private equity with the same brush as we use for the regulated sector," said McCreevy, who has sole powers to propose EU-wide financial regulation.
Times Online – The European Parliament will support calls tomorrow for Europe-wide legislation aimed at making the inner workings of hedge funds and private equity more transparent.
The proposals – championed by Poul Nyrup Rasmussen, the Socialist MEP and a former Danish Prime Minister – call for clear rules for these financial players, whose influence on the economic landscape is increasing.
MEPs want the European Commission to present, before the end of the year, legally binding minimum transparency rules on how investments are financed. These rules would also cover the qualifications of managers, possible conflicts of interest, registration of hedge funds and disclosure of ownership structures.
Peter Skinner, a Labour MEP and the party’s spokesman on financial services, said yesterday: “Current self-regulation attitudes are not enough to arrive at satisfactory conclusions, especially in the light of the current crisis. This is an important step to tackle current problems, including lack of transparency.”
EurActiv – Hedge funds and private equity could be forced to abide by minimum capital requirement rules in future if a report adopted by an influential European Parliament committee becomes EU legislation.
The Parliament’s Committee for Economic and Monetary Affairs voted on Wednesday (10 September) in favour of a resolution recommending tougher regulation on hedge funds. The decision was almost unanimous, with just one vote against and one abstention.
The report, drafted by former Danish Prime Minister Poul Nyrup Rasmussen, was negotiated until the last minute by MEPs, with over 200 amendments brought to the original. It is widely expected to be confirmed when it is brought before the Parliament’s plenary for a final vote on 23 September.
