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Monday July 05, 08:05
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EU Hedge Fund Rules May Hang On New Parliament
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The introduction of rules on the sale and marketing of hedge funds in Europe--including to retail investors--could depend on July’s internal elections to the European Parliament’s Committee on Economic and Monetary Affairs. The Committee approved the introduction of Europe-wide rules in December (CR, 12/22), but the Parliament cannot propose the rules directly, so it has been pushing the European Commission to do so.
The driving force behind the original proposal was John Purvis, vice-chairman to the Committee. Purvis has kept his seat as a member of Parliament, but his re-election to the Economic Committee is likely to be key, the official added.
"I think it would be a fantastic development," said Peter Astleford, partner with Dechert in London. The main advantage would be that hedge funds would have to comply with only a single set of rules on whom they can sell to and on how they market their funds, rather than different rules in every country, Astleford said. Calls to Purvis were not returned by press time. Calls to Stephane Janin in the Commission’s internal markets division, were referred to Mark English, spokesman, who did not return call by press time.
Other members of the Parliament have shown some support for hedge fund rulemaking, but it is unlikely they would press as hard because Purvis was the driving force behind the rules being proposed and their priority has depended on his leadership. Without further pressure there is less chance of the Commission taking action. The Commission itself has not made hedge fund regulation a priority and the Committee is charged with convincing it to address or regulate areas it feels need the attention. Those opposed to the rules have said they are too risky for retail customers (CR, 12/2). Members of Parliament, who are elected by constituents in each EU country, had to stand for re-election at the start of this month. But the Parliament’s internal elections to its influential Economic Committee will not take place until July. If the Parliament continues to pressure the Commission to introduce the rules in October, when the newly-elected Parliament is fully operational, then the Commission will probably have to introduce them, said Astleford. "I don’t think the Commission will be able to ignore Parliament," he noted.
An official at Parliament said Committee members are often re-elected because of their experience with economic issues. But it is impossible to say exactly how likely that is to happen because it depends on how many members of Parliament stand for a place on the Committee. He added that the EU’s recent expansion to 10 more countries means more competition for places on the Committee.
(Compliance Reporter)
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