Swedes Want More Financier Pay Caps

The Swedish EU presidency has indicated that it favours pay restrictions for hedge fund and private equity managers similar to those currently being debated for European bankers.

The plans will be contained in the latest package of proposed amendments to the draft Directive on Alternative Investment Fund Managers (AIFM), and could be released as soon as this week.

The AIFM, published by the European Commission before the summer, aims to tighten up rules in parts of the EU's financial sector that currently receive little attention.

Speaking a conference in Stockholm on Wednesday (11 November), Swedish financial markets minister Mats Odell said the pay curb proposals would be "very close" to rules being discussed to limit bankers' pay packages.

Mr Odell added that there needed to be a "level playing field for the whole financial sector."

EU lawmakers are currently looking at adjustments to the bloc's capital requirements directive in a bid to limit pay for bankers, including measures to defer bonuses over several years.

But Florence Lombard, executive director of the Alternative Investment Managers Association, said the plans were inappropriate as hedge funds, unlike European banks, had not received government bailouts, reports Bloomberg.

Regulation step-up

While hedge funds and private equity funds are considered to have played a relatively small part in starting the financial crisis, the large size and murky nature of their transactions has caused lawmakers to shine a brighter spotlight on their activities.

Alternative Investments Funds domiciled in the EU were valued at €2 trillion at the end of 2008, leading to fears that the failure of a large fund could destabilise the financial sector as a whole.

In its current shape, the draft EU directive will require hedge-fund managers and private-equity firms overseeing at least €500 million to report to regulators.

It forms part of the EU's response to the financial crisis, although the plans have drawn criticism for being both too lenient and too restrictive.

The Swedish EU presidency aims to have some level of agreement on the plans by the end of the year, but a full vote in the European Parliament is unlikely before the second half of 2010.

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