Funds Hub
Money managers under the microscope
New blow for hedge fund lobby
The battle over how hedge funds will be regulated by the EU has been going on for some time now and has taken many twists and turns along the way.
However, after apparently making progress with the latest compromise text from Sweden, opponents of tough regulation may have hit a setback.
According to a report by Jean-Paul Gauzes, obtained by Reuters, the Frenchman has recommended tighter rules than many had expected.
These include funds having to tell regulators how much they intend to borrow, the creation of a pan-European watchdog that could intervene if a fund is seen to be taking too much risk, and the same pay curbs as for bankers.
The Gauzes report, which was due to be published this week and discussed by committee next week, was seen by many in the industry as an influential report from a level-headed policy maker who had previously worked in the financial services industry and who therefore may have taken a softer line than some supporters of the bill.
There is still a long, complicated path to tread before the final set of rules is revealed, but the Gauzes report shows there is still plenty of lobbying to be done by the (within Europe at least) mainly UK-based industry.
Supporters of the bill, in contrast, keen to strike while the regulatory iron is hot, must surely be pleased that these measures are being recommended.
All these restrictions will change the nature of hedge funds into mutual funds.
It will be better for them to enforce ethical rules (eg no insider trading) but leave out the investment details.
After all, hedge funds are meant to take extreme risks to gain the maximum possible profits