The European Union has defended its draft hedge fund legislation, following criticism from the US that the rules could discriminate against foreign hedge funds, private equity groups and banks. In a letter to E.U. commissioner Michel Barnier, Wednesday, US treasury secretary Tim Geithner warned that the EU plans could cause conflicts between the two unions.
“The new hedge fund rules do not discriminate against foreign players and are not protectionist.”
At a regular news conference in Brussels European Commission economy spokesperson Amadeu Altafaj says the bloc was entitled to come up with its own plans, and that the proposals were in accordance with G20 commitments. He says that “the EU decision to act on hedge funds is in line with a G20 decision to reinforce transparency. The new hedge fund rules do not discriminate against foreign players and are not protectionist.”
In a letter to EU internal market and financial services commissioner Michel Barnier on Wednesday, US treasury secretary Tim Geithner warned that the EU plans could cause a transatlantic rift by discriminating against US groups.
He pointed in particular to so-called “third country” elements of the draft directive, measures designed to force non-EU funds to comply with the new rules if they wish to seek investors inside the EU.
Member state diplomats were meeting in Brussels on Thursday to agree on amendments to the draft legislation, put forward by the European Commission last April. EU finance ministers are then expected to finalize the member state position at a meeting next Tuesday, with agreement from the European Parliament then needed before full ratification can take place.
The move to finalize a European position on hedge funds comes as a number of EU governments ramp up pressure for commission action on credit default swaps (CDSs).