ECB speaks out over EU's hedge fund directive

THE EUROPEAN Central Bank (ECB) has warned EU bureaucrats that their plans to clamp down on the hedge fund industry could damage competitiveness with rival fund centres like the US.<br /><br />In a legal opinion on the European Commission&rsquo;s proposed directive to regulate hedge funds and private equity houses, the ECB added its voice to a growing number of experts who say the plans could drive vital business off the continent. <br /><br />&ldquo;The ECB urges the EU to continue the dialogue with its international partners, in particular the US, to ensure a globally coherent regulatory and supervisory framework&rdquo; the central bank said. <br /><br />The remarks underscore mounting frustration at the EU over the plans, which have been slammed as unnecessary and protectionist by experts. <br /><br />London stands to lose the most if the EU proposals find their way into law, as its hedge fund industry represents 80 per cent of all hedge fund business in Europe. <br /><br />Just last week UK City regulator the Financial Services Authority said the plans would cost hedge funds and private equity houses &euro;3.2bn (&pound;2.9bn) in extra one-off costs. <br />