EU states reach agreement on hedge fund rules

European Union member states reached an agreement on Tuesday to impose new regulations on hedge funds and other alternative investment firms. The rules, which still require the backing of the European Parliament to become law, are part of EU efforts to tighten financial regulations to prevent another economic crisis. Differences over the controls had been undermining attempts by Germany, France and Britain to speak with one voice as they prepare for a summit of Group of 20 countries. "I think it was important to approve unanimously the rules on financial supervision ... as we have done before going to the G20 meeting, and I hope the parliament will approve this before the G20 meeting of heads of state and government," Belgium's Didier Reynders said after chairing a meeting of EU finance ministers in Luxembourg. Member states had been divided over whether to grant a licence to foreign funds that want to work across the European Union's 27 countries. German Deputy Finance Minister Joerg Asmussen said an EU-wide funds passport would be in place for EU-based funds from 2013. For foreign-based funds, it would be available from 2015. In its initial reaction, the Alternative Investment Management Association welcomed the agreement. "We are glad that European finance ministers have reached agreement," said Andrew Baker, the trade body's CEO. "There is still much in the Directive that will be difficult to implement for the industry, and there will be a heavy compliance burden that the industry will have to bear. But the impact will be far less severe than if something close to the original proposal had been agreed."