Ireland unhappy with EU hedge fund rules


EUROPEAN UNION officials hit back yesterday at criticism from Tim Geithner, US treasury secretary, who has accused Brussels of pushing ahead with protectionist rules to regulate the hedge fund and private equity industries.

A spokesman for Michel Barnier, the EU commissioner responsible for financial services regulation, said the bloc’s proposed actions against hedge funds were in line with a decision by the Group of 20 to reinforce transparency in the financial system.

Mr Barnier wanted to “work closely” with the US to ensure “robust standards” in financial services, the spokesman added. The commissioner is due to visit the US soon, although no date has been set.

The disagreement comes at a sensitive time.

Diplomats from the EU’s 27 member states again failed yesterday to agree a compromise package of rules that would regulate for the first time hedge funds and private-equity funds on a pan-EU basis.

Britain, by far Europe’s biggest centre for hedge funds, is leading opposition to aspects of the directive, which it fears could impede the operations of funds based in London.

Alistair Darling, the UK’s chancellor of the exchequer, has argued that hedge funds authorised by regulators to operate in one EU country should be allowed to operate under a “passport” in all other countries.

Mr Darling has sided with Mr Geithner in opposing provisions that would require US hedge funds – or funds which are operating from London but registered for tax outside Europe – to seek approval in each European jurisdiction.

Countries that are unhappy with aspects of the proposed text are thought to include Ireland, the Czech Republic, Malta, Sweden and Austria. – Copyright The Financial Times Limited 2010