A panel of European Union lawmakers approved a proposal to force hedge fund managers outside the EU to agree to transparency standards in exchange for a so-called passport to market to investors in the 27-nation bloc.
The European Parliament's economic and monetary affairs committee approved the measure Monday as part of a package of tougher rules for hedge fund and private equity managers. The full Parliament is due to give its verdict on the draft legislation, which the U.S. has opposed, in July.
“It's very important,” Jean-Paul Gauzes, the French lawmaker who sponsored the proposal, said in an interview. “We have to bring order.”
The overall law, which would also see investment managers subject to restrictions on bonuses and how much debt they can use, was passed with 33 votes in favor, 11 against and three abstentions. It was opposed by U.K. Conservative members of the committee.
“We've adopted protectionist, fortress Europe policy,” Syed Kamall, a U.K. lawmaker, said after the vote. The rules will “reduce the return of pension funds” and could “lead to retaliation” from lawmakers in countries outside the EU, Mr. Kamall said.
Monday's vote may also set up a clash with EU nations over the final draft of the legislation, which was proposed last year by the European Commission. Finance ministers on Tuesday are scheduled to vote on a version of the draft law that would require fund managers to register separately in each country.
Hedge funds and private equity firms are under the scrutiny of lawmakers worldwide, who say they are partly to blame for the financial crisis.
Finance ministers in March put off a vote on the directive under pressure from the U.K., which sought to modify the proposed rules. Spain, which holds the EU's rotating presidency, said last week it would push ahead with the legislation without U.K. support.
Final EU approval of any measures requires an accord with the bloc's national governments in a process that could take another year or more. The negotiations with finance ministers “will be difficult,” Mr. Gauzes said. “The devil is in the detail.”