Britannia Radio

This is a complete mess and will almost certainly get redrafted - we 
must hope.  The fact that the socialists are leading the attack is 
not surprising, as they are 'agin' anything they don't totally 
control - that's socialism!  But the fact that the Commission can't 
tell the difference between a hedge-fund and private equity  doesn't 
inspire confidence in anybody.

Isn't there anybody there who knows what they're talking about?

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FINANCIAL TIMES 21.4.09
EU draft rules for hedge funds attacked
By Nikki Tait in Brussels

The European Commission's plans to regulate hedge funds and private 
equity for the first time threaten to become a central issue in the 
European parliamentary election campaign.

Some key parliamentarians criticised draft proposals on Monday as 
being "almost worthless".

In a letter to José Manuel Barroso, the Commission president, leaders 
of the Socialist group, the second-largest bloc in the parliament, 
said the proposal was so "filled with loopholes" that it would be 
"highly ineffective" in regulatory terms.

Poul Nyrup Rasmussen, president of the Party of European Socialists 
and a former Danish prime minister, accused Mr Barroso of failing to 
live up to personal commitments given last year, and of falling short 
of the demands of this month's G20 summit in London.

He thought it was "a scandal" that the European parliament had had to 
wait six months for the legislation, only to find it so inadequate, 
and said the hedge fund issue would be "central" to campaigning for 
June's poll.
The proposed legislation has not yet been formally published by the 
Commission. On Monday, officials would say only that it was still 
being worked on.

The official launch date was recently delayed until a week tomorrow. 
However, copies of the draft leaked out before Easter. These have 
been roundly attacked.

The private-equity industry, in particular, is unhappy because it 
would not be distinguished from the hedge fund sector - despite the 
fact that the former is generally accepted to pose no systemic risk. 
By contrast, the hedge fund industry has kept a low profile, and 
seems privately relieved that the proposals are not more onerous.

The leaked draft suggests that the Commission plans to regulate 
managers of "alternative" funds, rather than the funds directly. This 
is one of the main objections of the Socialist MEPs and the private-
equity industry, who say it would mean that non-EU managers could 
still operate in the EU, and market their funds, without any 
effective oversight.

The Socialist group letter said: "We consider it would be a major 
political mistake were the Commission to adopt such a proposal."

Under the leaked draft, managers of portfolios worth less than ?250m 
($323m, £222m) would enjoy a de minimis exemption from scrutiny - a 
figure the MEPs think is far too high. They are also critical of 
proposed moves to improve transparency and address technical issues 
such as taxation and "naked" short-selling, saying the draft is far 
too lax.

Mr Rasmussen said he had seen no signs of the Commission planning to 
make wholesale changes. This meant the leaked proposals might either 
be forced through with small adjustments or possibly postponed 
further if opposition grew.

The latest criticism comes as the European parliament prepares to 
approve two other reforms to financial regulation this week: a 
compromise deal that will change the way capital requirements are 
calculated for the insurance industry, and new legislation to cover 
credit ratings agencies.