EU defends hedge-fund rules in face of US pressure

Date: Thursday, May 13, 2010
Author: AFP

EU internal market commissioner Michel Barnier on Wednesday defended Europe's right to set tough new hedge-fund rules as he sought to heal a transatlantic spat.

Ending a three-day US visit, Barnier met Treasury Secretary Timothy Geithner to discuss rules that could force speculative US investors to obtain a "passport" to operate in European Union markets.

In a statement after the meeting, the two men said they had agreed broad principles to move forward, but did not give details.

The pair "reaffirmed their support for the principle of non-discrimination," according to the joint statement.

In April Geithner had warned that proposed EU measures would discriminate against US firms, calling for rules that would allow foreign hedge funds to operate across the 27-nation bloc.

Speaking after the meeting, Barnier told journalists that he would work to ensure European legislation was not protectionist.

But he insisted rules would not be neutered and that any hedge-fund "passport" would have to be "deserved."

"I am going to work on a balanced solution that will avoid all kinds of protectionism," he said.

"As far as the transatlantic relationship goes, of course I will see to it that it is not discriminatory."

But he added "I am not here to do a deal with the United States... this agreement is between Europeans."

Plans for tougher regulation were pulled in March amid intense opposition ahead of British elections from London's financial center, where the lion's share of EU financial services are housed.