Mandelson warns European Commission on hedge fund regulations

The UK business secretary Peter Mandelson has called on the European Commission to tread carefully over its planned Alternative Investments Directive, which will introduce new rules to the hedge fund sector.

In a speech in Brussels, Mandelson said that stifling hedge funds’ ability to operate within the European Union could impact on business funding, something that could prove dangerous as economies across the bloc continue to struggle.

“While I appreciate and support the Commission’s objective of better oversight of hedge funds through an Alternative Investments Directive, it is vital that this is fully consulted on and carefully designed,” he said.

“We have to make sure that we don’t cut off important sources of venture capital or do anything that makes it harder to manage venture capital investments within the single market.”

The directive has been criticised by many in the UK financial industry, a number of whom are concerned about the impact the legislation could have on the competitiveness of the City.

In late October the European Central Bank warned that the proposals must ensure the creation of a “level playing field”, through consultation with the USA in particular to create “a globally coherent regulatory and supervisory framework”.