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EU finance ministers agree on new rules to regulate hedge funds

After months of discussion, European Union finance ministers have finally agreed on rules to regulate hedge funds and ensure greater transparency. The European Parliament will vote on the proposals in November.


AFP - European Union finance ministers sealed a deal Tuesday to regulate the trillion-dollar hedge fund industry, after Britain and France settled a long-running conflict.

"We have reached an agreement with unanimity," said Belgian finance minister Didier Reynders, chairing talks in Luxembourg. "It was very important to complete this before the G20 meetings" upcoming in South Korea.

EU financial services commissioner Michel Barnier said it was "the first time the hedge fund sector is subject to European regulations," and stressed that "robust and clear new rules to reinforce transparency" meant there would be "no discrimination."

That was a direct response to US Treasury Secretary Timothy Geithner's fears of protectionist overtones in the French-led bid to have the industry -- 80 percent located in the City of London -- regulated by an incoming European Securities and Markets Authority that takes up work in Paris as of January 2011.

British financial services secretary Mark Hoban said it was a "significant advance from the situation in May, when member states were on the verge of voting through an agreement that would have closed the EU market to funds from third countries."

The deal now goes to a vote in the European parliament next month.

Britain has fought for months to ensure that funds based in Commonwealth outposts in the Caribbean, for example, but managed in the City of London, be able to sell to all of Europe on the strength of British regulations alone.

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