Towards pan-European Hedge Fund Regulation? State of the Debate

Abstract

Despite having been part and parcel of the European asset management universe for several years, hedge funds have been bypassed by the regulatory initiatives which have recently transformed Europe’s financial services landscape. That concerted action has yet to be undertaken in this field and that the European market for the cross-border distribution of hedge fund products continues to be fragmented has less to do with the absence of a European debate on hedge fund regulation than it has to do with the lack of a clear vision on what the future should hold for them. The purpose of this article is to critically examine hitherto European initiatives and proposals for the future regulation of hedge funds, assessing the prospect of their transformation into concrete regulatory action in the foreseeable future. Our account of European initiatives will be preceded by an inquiry into the treatment of hedge funds under Community law and by a brief comparative examination of contemporary hedge fund regulation in the EU.