European Union finance ministers backed stricter rules for hedge funds and private equity groups on Tuesday.
European Union finance ministers backed stricter rules for hedge funds and private equity groups on Tuesday. German Finance Minister Wolfgang Schaeuble answers questions. Photo: AFP
The draft rules will control pay and borrowing at hedge funds as well forcing them to disclose extensive information about how they are investing or short-selling.
The strict regime is part of a wider set of pledges by world leaders to create a more stable financial system.
"We are determined to accelerate the pace of regulation," Wolfgang Schaeuble, Germany's finance minister, said after the meeting.
"Up until now this was not regulated," he said of the hedge fund and private equity industry. "This hole will now be closed."
Britain had fought to water down the law and was hoping to overturn a provision that refuses to grant a single licence for foreign funds to do business across Europe. US Treasury Secretary Timothy Geithner has also objected to this.
London's objections were overruled in rare break with Brussels diplomacy which says no country should accept a law that it does not want to.
British diplomats said they had achieved the "best possible" outcome from the meeting, but concerns remain about the impact tighter regulations will have on London's hedge fund industry.
Britain is home to 80pc of the bloc's hedge funds and believes the new rules - likely to take effect around 2012 - will curb choice for investors by making it harder for managers to find investors across the EU's 27 countries.
Only the Czech Republic backed Britain in opposing the approval of the new rules by the finance ministers, insufficent support in the face of heavyweights France and Germany, who pushed for rigid restrictions.
The vote left Britain's new finance minister, George Osborne, outvoted at his first meeting with his peers. Officials said he did not speak during the deliberations on the issue.
The European Parliament's economic affairs committee approved its version of the draft measure on Monday evening, opening the door to formal negotiations on a final deal with EU states, perhaps by July.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/ditch-the-directive/7737229/EU-backs-tougher-rules-for-hedge-funds-private-equity.html
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/ditch-the-directive/7737229/EU-backs-tougher-rules-for-hedge-funds-private-equity.html
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