EC launches public consultation on hedge funds

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BRUSSELS - The European Commission has launched a wide-ranging public consultation on policy issues arising from the activities of the hedge fund industry, in view of developing appropriate regulatory initiatives. A significant part of global hedge fund assets are managed and administered in Europe and the EC hopes this consultation will make an important contribution to European and international reflections on whether the approach to the regulation and supervision of hedge funds should be reassessed in light of the financial crisis.

The results of the consultation will be discussed at a high-level conference in Brussels in late February 2009, and will serve as the basis for European input into the parallel reflections on hedge funds at international level by the G-20.

The consultation will look at issues such as systemic risk, market integrity and efficiency, risk management, transparency towards investors and investor protection.

This consultation is part of the Commission's comprehensive review of regulatory and supervisory arrangements for all financial market actors in the European Union, which is to be finalised in 2009 upon consideration of the report of a high-level expert group chaired by Jacques de Larosière.

The consultation is also a response to the recent reports by the European Parliament, which raise a number of concerns that have come into sharper international focus as hedge funds have, like many other financial actors, been heavily affected by the current financial crisis.

Commissioner Charlie McCreevy announced his intention to launch the consultation in a speech to the Economic and Monetary Affairs Committee of the European Parliament on December 1.

The deadline for responses to this consultation paper is January 31, 2009.

Click here for the consultation paper.