Regulation of hedge funds and private equity
Regulating hedge funds and private equity
o The need for regulation of these funds is part of a broader picture (supervision package, credit rating agencies, etc.).
o The systemic relevance of hedge funds has been assessed, so we need all funds to be registered and supervised in order to assess amount of systemic risk in the economy.
o In addition to the problem of systemic risk, there are also other problems relating to the funds which are about a healthy relationship between financial services and the real economy. Many of these complex instruments and activities were socially useless. Know more...
It is not a question of whether or not to regulate. The only question is how. In that regard, the Proposal of the European Commission is a big step forward, although some aspects needs to be improved for the Directive to be effective. Know more...
The Proposal of the European Commission is a big step forward, although some aspects needs to be improved for the Directive to be effective. Know more...
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)