Talks have collapsed between European lawmakers and diplomats to agree new controls for hedge funds, following a dispute that many fear will spoil Brussels' attempts to overhaul the regulation of finance.
The parliamentarian leading negotiations with European countries recently said he had disbanded efforts to reach agreement with diplomats last month, a deadline set by officials to agree rules to clamp down on hedge funds and private equity.
"The Spanish presidency (of the European Union) informed me it would not be possible to reach a deal before the end of June," Jean-Paul Gauzes told Reuters.
He was referring to attempts to find a compromise between countries and the European Parliament, which have an equal say in writing EU law.
"I have yesterday taken the decision to delay the vote until the second parliamentary session in September," the French lawmaker added, signalling a lapsing of the summer deadline.
One diplomat accused parliament of putting the 27-country European Union's overhaul of banking regulation at risk.
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Investor Scrutiny
In a world where Madoff is behind bars, investors are much more cautious about where they put their money. Before making investment decisions they’re conducting more onerous due diligence exercises encompassing detailed reviews of internal processes, systems and controls.
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Hedge Fund Standards Board
More and more Hedge Funds are looking to become signatories of the Hedge Fund Standards as these set the industry benchmark for a well managed fund.
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Operational Complexity
Multi Prime Broker Environment
Following the drama of the rescue of Bear Sterns and the collapse of Lehman Brothers, the creditworthiness of Prime Brokers has become an important consideration. This has resulted in the multi-PB model becoming widely established as hedge funds look to reduce their exposure to their PB failing. Greater operational complexity has developed as Hedge Funds have to implement and manage multiple Prime Broker relationships where, previously, one-at-a-time was the norm.
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Reconciliations
With the increased scrutiny from investors, Hedge Funds can no longer afford not to take reconciliations with their Prime Brokers and fund administrators seriously.
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