–New EU Rules To Follow On Derivatives, Credit Default Swaps

BRUSSELS (MNI) – A compromise must be reached on new hedge fund
legislation, European Commissioner for Internal Markets Michel Barnier
said on Monday, as he gave an update on European plans to overhaul
financial regulation.

European Union finance ministers are set to debate the
controversial new rules affecting hedge funds and private equity at
their meeting here Tuesday. The UK delegation opposes part of the
package, which they say put London’s hedge fund industry at risk.

“I shall be participating at the Ecofin council… there are going
to be differences,” Barnier said told reporters here. “I shall be
working on trying to find a dynamic compromise.”

“We are by no means out of the woods yet,” he said. “A compromise
must be reached.”

“By the end of the year we will have placed on the Council’s table
a full set of proposals on regulation,” he said.

“The Commission will try and ensure that equal treatment is given
to all fund manager, as long as those fund managers can ensure that they
are complying… with the rules,” Barnier said.

“The financial crisis is not over and it’s something that was
linked to a failure of regulation,” he said.

Later this year the Commission will propose a regulatory plan on
the markets for derivatives and credit default swaps, he said.

Barnier said the derivative market “represents trade on a massive
scale… most of this is going to be subject to more transparency and
supervision.”

He acknowledged that it “is a very complex area” but that
supervision was required.

“There’s a task force working on credit default swaps (CDS),”
Barnier said. “A proposal will be made in the autumn.”

“We have launched a study to evaluate and examine what is happening
because we want to gain an understanding,” the Commissioner said.

The Commission’s proposals would be “dealing with this matter, very
severely… at the very least to ensure responsibility… of those using
these financial products (CDS) and that is obligatory registration,” he
said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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