Recently enacted non-protectionist EU hedge fund legislation is an achievement that looked doubtful six months ago, said UK Financial Services Secretary Mark Hoban, but he hailed the Alternative Funds Managers Directive as a signal success for the free cross-border movement of capital. In remarks to PricewaterhouseCoopers, the Minister said that EU authorities reached an agreement where managers of hedge funds and private equity providers will be regulated in an internationally consistent and non-discriminatory way. Rather than seeing US and other third country managers frozen out of EU markets, he added, they will be able to qualify for a passport. This is of huge significance to the UK, as a leading player in this industry, the Minister emphasized, and will introduce greater competition, open up new markets, and create new investment opportunities. Most importantly, the EU has signaled it is open for business and will not close its borders and restrict free movement of capital.
There had been great concern earlier in the year from US and UK officials that the EU was moving towards protectionist hedge fund regulation through legislation that would deny an EU passport to US and other third country hedge funds. Treasury Secretary Tim Geithner had sounded an alarm in this regard. EU Commissioner for the Internal Market Michel Barnier had assured US officials that the EU would work towards non-discriminatory hedge fund and private equity fund regulatory legislation.