Money managers under the microscope
There has been no shortage of people lining up to lambast the EU’s draft directive on hedge funds and private equity.
But today the UK’s Financial Services Secretary Lord Myners stepped up the attack, criticizing the draft rules on leverage caps and where funds can be sold and promising a blitzkrieg of lobbying.
“It is perhaps easy for other European countries to make political capital out of demanding intrusive regulation of an industry of which they have little or no direct experience,” he told a meeting organized by the Alternative Investment Management Association this morning. “But it is woefully short-sighted, bordering on a weak form of protectionism.”
Declaring that the draft required “major surgery”, Myners set out plans to “leverage natural alliances” and also to win over other countries.
Yesterday I optimistically predicted hedge funds would learn a lot more about their regulatory fate as the G20 drew to a close.
That wasn’t exactly incorrect — the industry did find out for example that regulation and oversight will be extended to “systemically important hedge funds”.
There has been no shortage of calls from continental European leaders such as Angela Merkel and Nicolas Sarkozy for regulation of the hedge fund industry to limit potential systemic risks to the global financial system.
But it’s little surprise that some executives in London, where the vast majority of European hedge funds are actually based, have privately suggested the calls stem from motives rather more mixed than simply wanting better regulation.
The timing of the Alternative Investment Management Association’s hedge fund disclosure initiative indicates just how strong the winds of change are blowing in hedge fund land.
Coming just a day after ECB President Jean-Claude Trichet called the credit crisis “a loud and clear call” for extending hedge fund regulation, the move shows the hedge fund industry feels it must be more active in deciding the future shape of regulation.