Britannia Radio

The financial powerhouses are getting very alarmed at the destructive tactics proposed to make theur vital funds less dynamic.  The dirigisme of the French treasury seems to be the flavour of the month in Brussels.   But then Sarkozy is on a campaign to wrest supremacy in economic power from London in favour of Paris.  

He may have declared war on London but London - and especially our apology for a government - doesn't seem to notice. 

Christina Speight

FINANCIAL TIMES 16.6.09

Alarm at EU’s hedge fund rule plans

By Nikki Tait in Brussels

Hedge funds and managers of other alternative investment funds sold to professional investors will face a heavier compliance burden under proposed European Union rules than the already regulated retail fund sector, institutional investors are warning top officials in Brussels.

This regulatory burden could “far outweigh any benefits” and “cannot be right”, UK and Dutch institutional investors have told Charlie McCreevy, EU internal market commissioner, in a letter sent on Monday.

The letter, seen by the Financial Times, is significant because it is the first time the views of institutional investors, who are some of the hedge funds’ biggest customers, have been heard in the heated debate over the EU’s controversial proposals for regulating the hedge fund and private equity sectors.

When these were formally released in April, they provoked an outcry from the alternative fund management industry, which complained that the proposed regime would be unworkable. But they brought an equally vociferous response from left-leaning politicians in Europe who claimed that the regulations did not go far enough.

The latest letter is signed by Keith Skeoch, chief executive of Standard Life Investments and chairman of the Association of British Insurers, and Roderick Munsters, chief investment officer at the Dutch investment group APG and chair of Eumedion, the Dutch corporate governance forum.

Unlike earlier contributions to the debate, it offers a more balanced view of the proposed legislation. On the one hand, the institutions criticise the compliance implications and suggest there would be conflicts and overlaps with other EU rules, such as the markets in financial instruments directive, or Mifid.

Another concern is that the proposed rules “would effectively limit our access to third country funds” and “encompass and limit a range of funds and investment opportunities which do not pose systemic risk”.

But the institutions give their support to other aspects of the proposed directive – including the so-called passporting arrangements, which would allow funds that meet the requirements of regulators’ to be sold more widely across the bloc.

The proposed legislation will need the backing of the European parliament and EU member states

 [BUT, surely, by Majority Voting not unanimity -cs] .