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June 24, 2005
EU Contemplates New Rules For Hedge Funds
Of late there has been a heightened debate on the need for new regulations for managing hedge funds in Europe. It has been observed that more and more banks are exposing themselves to hedge funds without really knowing what the funds are doing. This critical observation has been made by Bank of International Settlements, the world's top central bank. German Chancellor Cerhard Schroeder would like that the G8 summit that is scheduled in Scotland in early July consider creating new rules for hedge funds. However, industry observers feel that though ultimately changes need to be made in the current legislature, there is really no need to take hurried steps. As it is, Hedge funds do not form part of the present EU regulatory framework. Therefore on July 14, the commission is only likely to propose a study group to assess the regulations of Hedge Funds and their likely impact of financial stability. Thereafter the commission will make the paper public in October. Reuter.co.uk reports:
"The Commission's green paper or consultation document will not make a case for major legislation for the funds sector generally, but to work within current laws."
Read More: Hedge funds seen escaping new EU rules for now
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