EU Hedge Fund Compromise
Possible Compromise on European Union Hedge Fund Rules
But many of the alternative-asset-management industry's biggest concerns have been watered down. The directive will give regulators new oversight of funds' leverage and capital ratios, but will no longer impose fixed limits.
Meanwhile, the French and German finance ministers haven't ruled out a compromise over new rules that would block funds domiciled outside the EU from marketing to European investors unless their home markets have equivalent regulatory oversight, a move that has raised concerns over protectionism, including from U.S. Treasury Secretary Timothy Geithner. The finance ministers have said that, so long as funds are adequately monitoring systemic risk, their access will remain unchanged. Private-placement systems might be allowed to continue, at least until a concept of regulatory equivalence has been agreed to. The European Parliament's draft even offers the carrot of a pan-EU "passport," provided funds agree to comply with the new rules and their home regulator agrees to enforce them. source