EC hedge fund crackdown will hit London hardest
Friday 12 November 2010
Europe's lawmakers have approved new rules ushering in pan-European regulation for hedge and private equity funds for the first time.
MEPs overwhelmingly backed the plans, which will have far more impact in London, host to at least 75 per cent of the industry, than anywhere on the Continent. The new rules impose reporting and registration requirements on funds, bring in capital requirements and contain investor protection measures.
They also contain measures to discourage private equity buyouts of companies with the aim of breaking them up – known as asset stripping.
They initially provoked a storm of controversy, not least in London. However, while the version passed yesterday hardly makes everyone happy – and has been criticised on the Left as not going far enough – it has eased tensions to some extent.
The London based Alternative Investment Funds Association (Aima) said: "We are glad that the European Parliament has voted in favour of the compromise text of the directive. This initial drafting phase of the legislation has been a long process that has produced a result that is by no means perfect. It is now time to move forward and seek further clarity to the legislation in the next phase, that of implementation."
Amanda Rowland, a partner at PricewaterhouseCoopers, the accountant, said: "Today's vote is a strong reminder to the asset management industry that a much more intrusive regulatory regime is on its way – through this directive and a raft of other changes in Europe and beyond. Managers need to start considering how their businesses will be affected."
Much work remains on implementation by the European Commission. In a few years the rules could impose a "passport" regulation barring funds from some jurisdictions but allowing pan-EU marketing for others.
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