Correspondent's Choice

This story about the proposed hedge fund regulations was published by EurActiv on 29th September 2010.

Just as talks on new regulations for alternative investment funds seemed close to the finish line, a French attempt to concentrate more regulatory power in Paris has thrown a spanner in the works.

France will propose that a new EU body, destined to be based in Paris, should be responsible for deciding whether hedge funds from outside the EU will be able to reach investors inside the bloc, EU sources said.

According to the French game plan, the European Securities and Markets Authority (ESMA), a new body that will open its doors in January 2011, would be the gatekeeper for non-EU funds as it would check whether the country where the fund is domiciled has the same rules as the country it wants to enter.

“The French want to play a pivotal role in third country rules,” an EU source explained.

EU sources fobbed off any hints that France was seeking greater say on alternative investment funds in the EU. “ESMA is not the cornerstone of the French proposal,” said one source.

French diplomats were still on the phone to Paris until late last night to see how much of a role ESMA would play in the French plan.

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