EU proposes hedge fund registration law

BRUSSELS – The European Commission proposed a draft law yesterday that would make it mandatory for hedge funds to register and disclose information on leverage to supervisors if they want to operate in the EU, a Commission official said.

The draft law has been subject to intense horse-trading ahead of its publication as Britain, the European Union’s hedge fund centre, fears overly draconian rules, while France is a keen backer of tighter regulation.The global hedge fund sector has assets totalling US$1,4 trillion, relatively small compared to the wider financial market. But policymakers say the lightly regulated industry can pose risks to the overall financial sector that need to be better identified and monitored.The draft law will also require firms such as private equity groups buying a controlling interest in a larger company to disclose information about the company’s performance.The new rules would apply to hedge funds with assets over 100 million euros (US$132 million) – much lower than earlier drafts had indicated – and to private equity groups with assets of over 500 million euros.EU states and the European Parliament have the final word, and amendments to the draft law are likely with adoption typically taking about 18 months. -Nampa-Reuters