London-based hedge fund managers are set to secure a partial victory in their battle against tougher European controls on their industry.
London-based hedge fund managers are set to secure a partial victory in their battle against tougher European controls on their industry.
A European Parliament committee working on the proposed directive will not impose limits on the amount that hedge funds and private equity firms can borrow to invest. Instead, it will give general guidance, leaving it to national regulators and the future pan-European supervisory body to intervene.
The measure will please the hedge fund industry in the UK, which has lobbied against any leverage limits as hedge funds typically borrow large amounts. The government, led by City minister Lord Myners, has also voiced concerns about the proposals as most European hedge funds and private equity firms are based in London.
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“We won’t give any figures on leverage, but if the regulators (national and European) identify risks, they will be able to point it out,” said Jean-Paul Gauzès, the committee’s rapporteur.
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