Euro ministers to debate private equity firm regulations

24 April 2007

European ministers are to debate greater regulation of private equity firms as well as hedge funds, according to a Reuters report.

A document seen by the news agency revealed that although private equity funds are perceived to have brought a range of economic benefits, ministers are still to examine whether further regulation may needed to limit risks.

It said: "There is a need for great vigilance in enforcing existing provisions on market abuse in order to sustain market integrity and confidence in [the] private equity business.

"Although recent evidence in the EU suggests that banks' exposures to the LBO [leveraged buy out] sector are not large relative to their capital buffers, the current competitive environment entails risks that warrant close monitoring so as to better identify the spreading of the economic risk."

News of the document comes as Germany has been spearheading a campaign to increase regulation of hedge fund activities at the ongoing G7 forum to minimise risks to national economies.

Calls for regulation of hedge funds have been dismissed by the International Monetary Fund at the G7 forum

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