European lawmakers back hedge fund clampdown

[steaa]

Source: Reuters

The European Parliament approved tighter controls on hedge funds and private equity firms on Monday, increasing pressure to rein in speculators accused of fuelling the global financial crisis.

Parliamentarians also want to place private equity and hedge funds under closer scrutiny by supervisors and give watchdogs the power to cap their borrowing.

Supervisors will also demand that hedge funds disclose how they are investing, breaking an industry taboo. This information, which can give hedge funds an edge over rivals betting on the markets, is closely guarded.

In addition to opposition from Britain, which has fought hard to water down the rules, the proposed law has led to a dispute between Washington and Brussels. U.S. Treasury Secretary Timothy Geithner complains the rules could discriminate against American firms.





Read more: http://www.reuters.com/article/idUSN178596620100517

[scarletwoman]

1. "Timothy Geithner complains the rules could discriminate against American firms." Oh yes! Do it!

Rein in the damn parasites!

[Ghost Dog]

2. Transparency & Regulation. Is Europe crazy?

The European Commission wants new rules to overcome what it sees as gaps and inconsistencies in existing, national regulatory frameworks.

...

Finance ministers will be discussing how to authorise hedge fund managers to work within the EU and also about whether there should be limits on the amount hedge funds can borrow.

Private equity investors will also come under the scope of the legislation, in particular the way they treat other shareholders and employees when they buy a big stake in a company.

If finance ministers agree a text for the new legislation it must then be negotiated with the European parliament before a final vote in July.

Other proposals include stricter reporting and registration rules, and guidelines to limit pay.

A European financial supervisor to keep checks on the amount of borrowing hedge funds can take on would also be appointed under the plans.

There are proposals for new guidelines on short selling, including requiring managers to regularly disclose information on important short positions to national authorities.

...

The EU legislation also seeks to curb highly-leveraged funds - that is, funds that borrow a high multiple of their capital to increase the size of their investment.

/... http://news.bbc.co.uk/2/hi/business/10120925.stm