Hedge Funds under Attack

On Tuesday, May, 18th, European finance ministers are to meet in Brussels, Belgium in order to discuss the future of hedge funds.

Let us remind that hedge funds have been blamed by many for the worsening of the economic downturn and undermining of financial stability. This is the major reason why members of the EU parliament want greater regulation of hedge fund investments.

The coming meeting is expected to be tough for Mr. Osborne - the new UK Chancellor - as the vast majority of EU hedge funds (80%) are located in London.

The possible drawbacks of greater supervision over hedge funds might include inability to raise money within the European Union, overprotectionism and new treatment of private equity investors.

It is expected that EU MPs will introduce such measures associated with regulation of hedge funds as: strict registration and reporting rules, checks on hedge funds' borrowing, new rules for short selling, etc.

In case the European MPs agree on the new regulatory legislation, it will need to be further negotiated with the EU parliament.