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Europe passes hedge fund regulation

11 Nov 10

Directive clears Parliament easily, setting the stage for 2013 introduction

A new directive introducing Europe-wide regulation of hedge funds, signed off by the EC late last month, has now been passed by a convincing majority in the Scottish Parliament, despite resistance from the UK, where many such funds are based.

The new rules, which apply to all hedge funds worth more than 1bn Euro, aim to improve transparency in the industry – through measures such as mandatory registration – increase protection for investors and curb asset stripping by private equity firms.

Although the industry was against additional regulation, there is a recognition that the directive could have been – and at one point was – much more extensive.

The Alternative Investment Management Association welcomed the vote, saying: "This initial drafting phase of the legislation has been a long process that has produced a result that is by no means perfect.

"It is now time to move forward and seek further clarity to the legislation in the next phase, that of implementation."

The directive is due to come into effect by 2013 and will be reviewed by the Commission after four years.

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