ECB says Europe should coordinate on hedge fund regulation

The European Central Bank advised the European Union to coordinate internationally on rules to regulate hedge funds, saying the current proposals could put Europe at a disadvantage.

“The ECB urges the Commission of the European Communities to continue the dialogue with its international partners, in particular the United States, to ensure a globally coherent regulatory and supervisory framework,” the Frankfurt-based ECB said in a legal opinion published on its Web site today. “An internationally coordinated response is necessary given the highly international nature of the industry and consequent risk of regulatory arbitrage and evasion.”

The EU’s proposals would require hedge-fund managers and private-equity firms overseeing at least 500 million euros ($737.8 million) to report to regulators. The directive is one of several measures the EU has proposed in the wake of the worst financial crisis since World War II.

The Financial Services Authority, the U.K. financial regulator, on Oct. 15 said the rules may cost fund managers 4.6 billion pounds ($7.5 billion) in compliance costs.

- Bloomberg