Financial Sector: EU- US hedge fund clash

EU-Digest

The Financial Sector; EU-US hedge fund clash

(Reuters)Debate over controversial EU laws on hedge funds shifted to the United States on Monday as a key industry body warned of protectionist aspects of the rules which have prompted Washington to lobby for changes. The Alternative Investment Management Association (AIMA) said the planned laws on alternative investment funds create "potentially major difficulties" and loss of business for funds and investors outside the European Union. The vast majority of the euro 1 trillion ($1.4) hedge fund industry is managed either out of the United States or UK.

Note EU-Digest: the bottom-line is not that the EU Directive is protectionist, but rather that it is a means for putting some controls on the presently uncontrolled hedge fund "manipulators". The draft directive, announced already in April, allows managers in non-EU countries to sell their funds to European investors, but only if regulation and supervision is equivalent to that in Europe, and only after a three-year transition period. This is good policy by the European Union, and the EU Commission and EU Parliament must not be swayed by pressures from the US Government or financial sector lobbyists.