May 19 (Reuters) – The European Union’s 27 countries and the bloc’s parliament agreed to tighten controls of hedge funds and private equity this week.
Negotiations will now begin between the two to hammer out a final version of the law to regulate the secretive industries by 2012.
Although some issues remain contentious, such as how the new law will treat foreign funds, both parliament and European countries have committed to set up broad controls on a sector many suspect exacerbated the financial crisis.
Here are the highlights from the new law:
* The directive does not lay down a rigid code of rules with caps on borrowing or pay but sets up a “regulatory and supervisory framework” for watchdogs to police hedge funds and private equity.
* It will put hedge funds under the eye of what one senior industry figure dubbed ueber-watchdogs, giving those authorities the power to demand closely-guarded information about how the fund invests or borrows as well as to intervene with curbs.