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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.
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.
The Independent – Hedge funds have given a voluntary code for the industry a collective thumbs-down – not a single firm has signed up to the compliance standards since they were launched in January.
Nearly five months ago the Hedge Fund Working Group (HFWG) published a raft of recommendations for the sector that were intended to raise governance levels across the traditionally secretive sphere. But a spokesman confirmed last week that no hedge funds had signed up to abide by the proposals beyond the original 14 signatories, including Man Group, Brevan Howard, Och-Ziff Capital Management and CQS.
An HFWG spokesman said the body’s priority was the appointment of a permanent chair, adding that it was speaking to a number of groups that could possibly sign up to the standards.
At the publication of the guidelines in January, Sir Andrew Large, chairman of the body, said: "Now it is up to investors to help take this forward. This is a voluntary, market-led initiative based on disclosure. It is investors who can provide the market discipline to ensure these standards are widely adopted."
In April a survey by the accountants KPMG revealed that eight out of 10 pension funds favour investing with a hedge fund manager that has complied with the 28 principles of the standards set out by the HFWG. More than 50 per cent of funds surveyed said they would require hedge fund managers to comply with the standards within three years.
News of the response to the voluntary code comes as the European Parliament assesses proposals to toughen up legislation linked to the industry. The former Danish prime minister, Poult Nyrup Rasmussen, is leading a group of MEPs calling for greater openness and scrutiny of hedge funds and private equity groups.
