City minister Myners in EU hedge pledge

CITY minister Paul Myners has pledged to fight potentially disastrous European Union (EU) plans to cap the amount hedge funds are allowed to borrow, after key reports predicted a rebound for the sector.<br /><br />Myners this weekend said he would fight &ldquo;tooth and nail&rdquo; to revise a Brussels directive seeking the hedge fund curb, which could devastate a cornerstone UK industry on the cusp of a dramatic recovery.<br /><br />He said hedge funds have survived the financial crisis with relatively little chaos and called for any regulatory response to be &ldquo;proportionate&rdquo;.<br /><br />Among the most potentially damaging and unnecessary rules, according to the Alternative Investment Management Association, is one stopping non-European companies from investing in European funds.<br /><br />Myners, financial services secretary to the Treasury, is due to meet the Swedish deputy finance minister next week to fight against the directive, which allows European Union mandarins to target funds they consider to have &ldquo;systemically high&rdquo; leverage.<br /><br />A Credit Suisse survey of 600 investors who run $7 trillion (&pound;4.2 trillion) of assets, said late last week hedge funds are about to see a &ldquo;significant bounce in inflows once investors regain their confidence, which is currently gaining momentum&rdquo;.<br /><br />The report said conditions had stabilised for the hedge fund sector and, given current institutional exposures to the funds, around $130bn (&pound;79bn) is expected to flood into the sector &ldquo;even without counting the pending inflows from new investors and new allocations&rdquo;.<br /><br />Consultancy Kinetic Parners last month warned the directive could&nbsp; cost the UK hedge fund industry &pound;3bn just to implement.