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EU regulators target UK hedge funds

Draft proposals from the EU regulator regarding hedge funds and private equity companies have prompted a furious response from the Association of British Insurers (ABI). This group of investors is one of the largest and most influential in the UK stock market, said to own around 15 percent of all investments in the UK. While the ABI may have a limited influence over the EU it certainly has a significant voice in the UK government and there are hopes this will be used to voice further concerns within the EU.

While there is some support for significant changes in the hedge funds and private equity sector, the introduction of in-depth regulatory registration, the production of regular reports and various trading disclosures would increase costs significantly in what is a potentially high risk, high return sector. However, ultimately it would be UK investors who would pay the price for this increased cost of regulatory obligations and potentially kill, or reduce the impact of, a vital area of the financial sector.

As we have seen on a number of occasions, EU regulators appear determined to snatch more and more power from the London market which has for some time been a world leader. They have tried various strategies and introduce various regulations via EU members although ultimately they have yet to grasp hold of London. Whether today's announcement will tip them over the edge and see London's competitive edge reduced remains to be seen.

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