An EU bid to slap strict new curbs on the $1 trillion hedge fund industry remains stalled, with a parliamentary vote originally due next week now postponed until next month, an MEP said today.
Jean-Paul Gauzes, from the European Parliament, said a vote to adopt standard regulations across the 27-nation bloc had been delayed until a plenary in November failing consensus within the union.
Belgium, which currently holds the rotating European Union presidency, 'up until now has not been able to obtain agreement from the Council (representing member states) and wants to pursue negotiations', he said. A meeting of ambassadors of member states failed to produce agreement yesterday, a source added.
Britain and France notably are in disagreement over the 'passport' issue - who decides the rules of the game to trade funds within Europe's half-a-billion population, a national market or a single European authority.
Britain, home to 80% of Europe's hedge fund industry, 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.
US Treasury Secretary Timothy Geithner had warned in March that the legislation would amount to a protectionist onslaught.
Managers argue that the need to obtain regulatory approval in each of the other 26 EU countries will cost millions of pounds in fees and could lead to an industry exodus to Switzerland and the Middle East.
But France, which fears opening the EU to offshore funds, has called for strict regulations.
There is also continuing disagreement on the powers to be handed to the European Securities and Markets Authority (ESMA), which will start up in 2011 as part of the new supervisory bodies enacted in the aftermath of the global financial crisis.
