Industry groups representing European buyout firms are coordinating efforts to lobby against mandatory regulation of private equity and hedge funds, as proposed in the recently published Rasmussen Report.
Poul Nyrup Rasmussen, head of the European Socialists party and former prime minister of Denmark, last month presented his 250-page report and recommendations to the European Parliament's Economic and Monetary Committee.
In it, he calls for an EU-wide set of regulations to reduce instability and conflicts of interest, enhance transparency and reduce “excessive debt”.
“Long before the financial crisis we were warned about the systemic risks and excessive debt of hedge and private equity funds,” Rasmussen said in a statement. “Today's financial crisis was not caused by hedge and private equity funds – but the crisis revealed the huge interdependence of all the players in the financial market and showed the high vulnerability of companies with heavy debts due to leveraged buyouts.”
The report’s recommendations include:
- A “single entry point” into a single European financial market with a European Union framework for transparency, registration and authorisation for managers of hedge and private equity funds;
- Introduction of new capital requirements – like those that already apply to mutual funds, banks and insurance companies;
- Creation of an EU Public Credit Agency, an independent, conflict-of-interest free credit rating agency to introduce competition into the credit rating industry;
- A public register for complex, structured credit products;
- A European Financial Supervisor covering all financial sectors to increase cooperation between national supervisory bodies and oversee cross-border and European-wide activities.
The British Venture Capital Association’s chief executive, Simon Walker, said in an e-mailed statement that the Rasmussen Report is “firmly on our radar”, and that it is lobbying, along with the Confederation of British Industries and the European Venture Capital Association, for a self-regulatory approach akin to the UK’s Walker guidelines.
“We are coordinating with the CBI and EVCA and actively communicating with other national trade associations based in continental Europe to create better understanding around the positive contribution private equity makes to mainstream business – both here and in Europe,” Walker said.