Hedge funds hit back over new European rules on the industry

CONTROVERSIAL new European rules planned for hedge funds could threaten financial stability, the global industry trade body has warned.

The European Commission has made “significant and wide-ranging” departures from regulatory advice, claims to the Alternative Investment Management Association.

“If implemented without modification, the proposed Commission text could be disruptive to the asset management industry in the EU and globally, potentially undermining some of the stated policy goals of investor protection and financial stability,” AIMA said yesterday in an analysis of the draft regulation.

The industry is particularly concerned about two areas – the protectionist implications of the “third countries” section, which would stop EU investors putting money into non-EU funds, and the way that the directive seeks to curtail leverage.

Syed Kamall, the Conservative MEP for London, has also criticised the commission for “going back” on what had been agreed previously.