France wants non-EU funds fully regulated: Lagarde letter
France is not against foreign hedge funds operating in Europe, contrary to US charges, but wants them to be regulated, preferably via a European-wide body, a French document showed on Money.
In a letter to US Treasury Secretary Tim Geithner, French Economy Minister Christine Lagarde said that France was not taking a protectionist stance on one of the important regulatory reforms sought after the global financial crisis.
Rather, France believed that such non-European, offshore funds should have the same access to the European market as before, Lagarde said in a letter addressed to Geithner on Friday.
But with negotiations on their access to the market "entering a decisive phase," according to Lagarde, the issue now turns on how they will be regulated.
Currently, such hedge funds must seek clearance from each national jurisdiction but they want such approval to give them the right to operate throughout Europe -- in effect, to serve as a 'passport' for all the countries.
Lagarde said, however, that France could not agree with this because it would mean these foreign funds, if cleared by just one EU member, were not subject to the same regulatory norms as European hedge funds.
The idea of "same rules, same rights," does not apply to products which differ from those offered by the European-based funds, she added.
Additionally, "it would be somewhat paradoxical if a directive seeking to regulate such speculative funds actually makes it easier for them to operate," she said in the letter.
In this case, "if a 'passport' for offshore funds has to be adopted, France believes that it ought to be a really European (one)," Lagarde said, adding that that would involve their management being "registered with and supervised" by European regulators.
Earlier this month, Geithner told Lagarde that any proposal that would limit or delay access to such a regulatory 'passport' for non-European funds, while European groups got full EU access, would be discriminatory and contrary to engagements already given.
© 2010 AFP