Money can’t buy everything.
The European Securities and Markets Authority (ESMA) recommended that the European Commission deny U.S. hedge funds “passports” to operate across the E.U., reports Reuters. ESMA advised that hedge funds based in Jersey, Guernsey, and Switzerland be allowed to operate within the 28-country region, but denied U.S. funds the same privilege saying it could create uneven competition. The European Commission will have the final decision on the matter.
“ESMA is of the view that in the context of a potential extension of the… passport towards the US, there is the risk of an unlevel playing field between EU and non-EU Alternative Investment Fund Managers as regards market access,” wrote ESMA in a statement.
Operating “passports” cut down on costs for funds, making it unnecessary to get authorization in each E.U. state to market. Funds based in the E.U. are automatically given the passport.
U.S. hedge funds are at an advantage in their home country, as the U.S. requires E.U. managers have an office in the country in order to reach most investors. An E.U. passport would give U.S. funds unfettered access to the E.U., without needing an office on the continent. A U.S. passport for European funds doesn’t look like a possibility any time soon.
ESMA also would not recommend giving passports to Singapore and Hong Kong until it had more information.
Photo: hjl