Germany’s Merkel Calls For Even Stricter Hedge Fund Rules

May 24 2010 | 11:57am ET

Hedge fund managers who think that the European Union’s proposed hedge fund rules are as bad as it can get had better think again.

German Chancellor Angela Merkel, among the strongest proponents of hedge fund regulation, said Friday that she isn’t satisfied with the current directive, which has been approved by the EU’s finance ministers and is making its way through the European Parliament. Merkel said she will push for further hedge fund regulation.

“We have to find unity, since on the fundamental question we’re in agreement that there have to be regulations for hedge funds,” she said.

That’s about the only area on which there appears to be agreement. While new British Prime Minister David Cameron said, after meeting with Merkel on Friday, “We do accept the need for regulation,” he added that it “needs to be fair and proportionate.” Neither the U.S. nor the U.K. believe that to be true of the EU directive, which would impose strict new reporting and custody requirements on hedge funds and private equity funds, as well as possible leverage and borrowing limits. There are also concerns that the version of the rules approved by the finance ministers will bar foreign hedge funds from the European market.

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