ECOFIN EU presidency's Steinbrueck says hedge funds must be more transparent

ECOFIN EU presidency's Steinbrueck says hedge funds must be more transparent

	Published : Sat, 21 Apr 2007 15:57 By : Agencies Print this Story

BERLIN (Thomson Financial) - German finance minister Peer Steinbrueck, whose country holds the EU's rotating presidency, said ministers' discussions were broadly in favour of self-regulation for the hedge fund industry but that 'we all need greater transparency'.

'(Regulation) will be an indirect approach, dependent on voluntary input from industry,' he said at a news conference at the meeting of EU finance ministers.

Steinbruck said a voluntary code of conduct would be one option for industry, adding that 'it's very important to have them (hedge funds) on side'.

'The two crucial questions are how to implement a code of conduct, and who would monitor it,' he noted.

The minister said it would be a 'success' to have an 'agreed code of conduct with the major players in the hedge fund industry,' adding that the largest funds account for 80-90 pct of the volume of all such funds.

The European Commission is pursuing a similar approach in the clearing and settlement industry, where a new code of conduct aims to cut the cost of trading shares between bourses in Europe by enhancing transparency and increasing competition in the post-trading sector.

Steinbrueck also called for member states to complement increased transparency with better cross-border communication.

The EU needs 'more intensive exchange between different regulatory authorities,' he said.

EU economics and finance commissioner Joaquin Almunia agreed that hedge funds are a 'useful institution for function of markets,' but said that 'we need to increase the safety of people who invest (in them)'.

Bundesbank President Axel Weber, who is also a governing council member of the ECB, said there was a need to ensure the market 'works properly,' adding that the voluntary approach to regulation 'will only work if the relevant information is available vis-a-vis the banks, margins and other risk elements'.

Speaking separately, EU internal markets commissioner Charlie McCreevy reiterated his support for an industry-led approach to regulation of hedge funds and said there was 'no market failure' that would justify external regulation.

He added that hedge funds were 'aggressive... but they are big boys who know what they are doing'.

frances.robinson@thomson.com

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