Are the EU's proposed regulations for hedge funds et al too strict or too lax?

As might be expected, the proposals are a mixture of the too-lax and the too-strict.

For example, the Commission has proposed mandatory registration of managers of alternative investment funds selling to professional investors in the EU, but with exemptions for managers of very small portfolios. This makes sense, provided the registration is possible on any one of several competing exchanges: registration provides transparency and the possibility of checking on reliability; competing exchanges provide the possibility of efficiency, innovation and value-for-money.

On the other hand, consider the propositiong that financial institutions retain only 5 per cent of the securitised products they originate and sell. How much profit does one need to make on the 95% that one can sell, in order to be incentivised to sell absolute crap? Given industry practices, any requirement to hold less than 25% is an open invitation to continue with the kinds of activities that have led to the present crisis. Sphere: Related Content