Concrete examples

Transparency and Regulation: the case of hedge funds

As a recent ALTER EU report put it, Hedge fund regulation was designed with the advice of Expert Groups who recommended continuing the light touch regulatory approach which in their view had "served the industry, its investors and the wider market well".

• In January 2006, the Commission appointed two working groups to look at regulation relating to hedge funds and private equity. Both groups were made up exclusively of industry representatives. Staff from the Commission performed a secretariat function. The group concluded there was no need for additional specific or targeted legislation of hedge fund participants or investments strategies at a European level". They singularly failed to analyse the risks associated with the hedge fund industry. As a result, no action was taken.

• In 2007, Democratic pressure yields few results: The Rasmussen report, which was passed in the -democratically elected- European parliament with a very large majority, was not used as a basis for the legislative proposal.

• As a result, the Commission launched a very short consultation (1.5 months) during the Christmas Holidays. Together with he FEPS, we launched our own expert group, with people coming from central banks, former hedge funds managers, lawyers etc. The proposal had many loopholes and did not address key issues that the financial industry did not want to see addressed (for example naked short selling)

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