Myners vows to save Britain's hedge funds
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Independent Minds
Lord Myners, the City minister, has dismissed fears that the Government is caving in to EU regulators over harsh new rules which could penalise London's thriving hedge-fund industry.
Top hedge-fund traders have criticised the Government's handling of the proposals, threatening to leave London if they go through. But Lord Myners, who described the legislation, as "fundamentally flawed and bad for London" said their anxieties were unfounded. Mark Hoban, the shadow Treasury Secretary, has also accused the Treasury of "caving in", claiming that it has not done enough to get the legislation amended. "It's of vital importance for London to get this right."
But Lord Myners said that he and other Treasury officials, with the support of the hedge-fund industry, are working flat-out to persuade Brussels to amend the Alternative Investment Fund Managers Draft Directive. "The industry shouldn't worry. I am not going to let it go the same way as our coal communities. But all the headlines about hedge-fund managers threatening to leave London don't help our case."
Meetings with hedge-fund representatives are taking place all the time, he said, adding that many of the proposals would strengthen the industry. "It's not all bad," he said.
Backing up his claim that the Government is lobbying the EU hard, Lord Myners said he is going to Stockholm at the end of this month to meet the Swedish Minister of Finance, Anders Borg, to put London's case.
Sweden takes over the EU presidency in July and is thought to be far more sympathetic towards the UK's objections than many in the EU, particularly the French and Germans. Lord Myners has already met with Mats Odell, Sweden's Minister for Financial Markets.
Brussels is pushing for tougher regulation of hedge funds with laws to mandate the amount of leverage they are permitted, which is particularly damaging since most trading strategies depend on leverage. It also wants to restrict hedge-fund managers' partners, such as prime brokers, to the same tax jurisdiction which will stop many investors coming to London as most of them are registered off-shore.
According to the Alternative Investment Managers Association, the trade group for more than 1,000 hedge funds globally, the worst of the new rules is one preventing non-European institutions from making investments in European funds. A spokeman said this could have dangerous consequences. "This is protectionist, breaking the World Trade Organisation's rules and may even breach Brussels' own rules of subsidiarity."
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Comments
We must surely be doomed if our collective memory and capacity for action don't even stretch back 1 year, let alone 100. I think Lord Myners will be shown to be dangerously wrong when the second phase of this depression kicks in. The hedge fund bubble will finally burst and the people now complaining about regulation will disappear into the wind leaving us to foot the bill a second time.
Remember Brown rushed off to Paris at the start of this crisis for that famous summit where he claimed to be at one with Sarkozy and Merkel, that he had always argued for greater regulation as they had. The only question then was, and so remains, how was Brown going to successfully back pedal his way out of hug-a-foreigner.
We are now seeing him do it. Now that he thinks those little green shoots are sprouting all over the place.
And he has the Press behind him. Even Paul Krugman must be wondering what he said at the LSE because the press reports bear little relationship to his speeches. The press paint him as the clarion call for Britain's recovery. Whereas he said nothing of the sort. He did say Britain was getting off relatively lightly and that was about all he could say apart from wonder at the morality of the good (the Germans and others) paying the price for the bad (Britain and America).
None of which bothers our boys and girls in print or broadcasting. Krugman is supposed to have shocked us by saying this recession is another Japan. Shocked? The Berkley study showing this recession to be faster and steeper than the Great Depression has been around for months, but those who tell us of shock are those who have in their newspapers pretended the Berkley study never existed. Pravda lives.....
Hedge fund managers may not be likeable, but they are valuable links in the business world. For example, at the moment, banks are ultra-cautious, and businesses are able to get funding directly from hedge funds. The press has been very ill-informed about hedge funds, so it is not surprising there are so many negative comments here. And it is not surprising that the press has been so ill-informed because hedge funds are not allowed by law to say anything that might amount to marketing.
So there is more to this than you think.