EU Parliament Proposes New Regulatory Framework For Hedge Funds

by Ulrika Lomas, Tax-News.com, Brussels

19 January 2004

Members of the European Parliament have proposed an EU-wide regulatory regime for hedge funds in a bid to attract the growing alternative investment sector back to onshore European jurisdictions.

The Parliament last week voted to adopt an ‘own initiative’ report by Scottish member John Purvis which argued for a “light handed” regime, focusing on whether managers and directors are fit and proper to run hedge funds, and investor protection against illegal distribution and sales methods.

Members have also called on the European Commission to take action against governments who discriminate against funds domiciled in other Member States through taxation rules or additional regulatory requirements.

Purvis commented: “This should be a light-handed system, so as to help attract them to locate in the EU rather than in the tax havens where they are currently focussed.”

Additionally, members emphasised the need for a separate regulatory regime for derivatives markets, and urged the Commission to draw together the existing EU legislation that will provide a comprehensive legislative framework for the treatment of derivatives.

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