Geithner slams EU rules

THE European Union is on course for a major “falling out” with the US if it goes ahead with new rules for the hedge fund and private equities industries.

The Alternative Investment Fund Managers directive, which would impose tighter restrictions on US hedge funds, private equity and other alternative investment funds entering the EU, has been labelled “protectionist”, by US Treasury secretary Tim Geithner.

Geithner sent a strongly worded letter to Michel Barnier, Europe’s internal market commissioner, making it clear that regulation for the financial services industry was a global and not a regional matter.

Paul Myners, UK financial services minister, has also spoken out against the proposed new rules which would force EU-based private equity and hedge funds to use only locally based banks as custodians and depositaries.

The UK financial services secretary to the Treasury said: “An open single market in fund management must be a major opportunity for Europe.”