European Union agrees private equity/hedge fund legislation

Agreement on the new rules follows France's retraction of objections to many proposals. The European Parliament will vote on the new regulations in Novermber, with member states then having two years to incorporate them into national law.

Many draft terms, such as caps on leverage, have been either removed or diluted in the final version, but PE firms within the EU will still face a higher compliance burden and a more tightly regulated environment. The so-called passport system, allowing EU-wide marketing rights to funds whose host countries meet reciprocal agreements on money laundering and tax, is also still in place. The new European Securities and Markets Agency, to be launched next year, will oversee implementation of the new rules within member states, and will be able to order national regulators to ban activity by PE or hedge funds if it poses domestic systemic risks.

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• Topics
• Regulation
• Europe
• Funds
• Fundraising