The markets commissioner said he would deal "very severely" with credit default swaps in legislation planned for October. "These people don't like to come out in the light of day. We are going to flood them with light," he said, highlighting the need for more transparency.
The warning came as a European Parliament committee prepared to vote on Monday night on a version of the Alternative Investment Fund Managers Directive. That came ahead of a meeting of European Finance Ministers on Tuesday where they will vote on their own version. The two sides will then work in 'trilogue' to agree final legislation.
Critics believe both versions will harm the City, curtail investment opportunities, and lead to an exodus of hedge funds and private equity firms from the UK. (AtW's comment: where would they go?)
The MEP committee was expected to approve a proposal to force non-EU hedge funds to agree to transparency standards in exchange for a so-called passport to market to European investors. (AtW's comment: that's the right approach - if you do not comply with EU laws then don't expect to trade inside the block)
Mr Barnier backed that proposal, calling for "equal treatment". However, his calls were given short shrift by market insiders who slammed the passporting system. "How is a US fund going to prove that it meets the requirements?" one source said. "The SEC [US market regulator] is going to say it's not our job to do that."
Finance ministers are expected to vote through rules requiring funds to register separately in each EU country, a proposal which has also come in for heavy criticism.
George Osborne, Britain's new Chancellor, opposes the directive but is expected to back down in the face of overwhelming support from other EU countries.
The warning came as a European Parliament committee prepared to vote on Monday night on a version of the Alternative Investment Fund Managers Directive. That came ahead of a meeting of European Finance Ministers on Tuesday where they will vote on their own version. The two sides will then work in 'trilogue' to agree final legislation.
Critics believe both versions will harm the City, curtail investment opportunities, and lead to an exodus of hedge funds and private equity firms from the UK. (AtW's comment: where would they go?)
The MEP committee was expected to approve a proposal to force non-EU hedge funds to agree to transparency standards in exchange for a so-called passport to market to European investors. (AtW's comment: that's the right approach - if you do not comply with EU laws then don't expect to trade inside the block)
Mr Barnier backed that proposal, calling for "equal treatment". However, his calls were given short shrift by market insiders who slammed the passporting system. "How is a US fund going to prove that it meets the requirements?" one source said. "The SEC [US market regulator] is going to say it's not our job to do that."
Finance ministers are expected to vote through rules requiring funds to register separately in each EU country, a proposal which has also come in for heavy criticism.
George Osborne, Britain's new Chancellor, opposes the directive but is expected to back down in the face of overwhelming support from other EU countries.
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