EUROPE - European Commission to discuss transparency proposals

Many private equity professionals had voiced concerns about the implications of the reports, which call for greater disclosure from the financial sector in a range of areas, with some claiming it could further dampen liquidity. However, EVCA secretary general Javier Echarrí suggests there is no better time to have the debate: “A lot of effort has been put into educating this parliament about the private equity industry. If this discussion was to take place next year under a new parliament we would have to start from zero.”

Furthermore, Echarrí argues that there are reasons to remain optimistic about the debate taking place. “The reports presented were distinctly different from those presented earlier this year,” he says, “the debate has achieved, among other things, a clear differentiation between private equity and hedge funds and a recognition of the regulatory capacity in place at the country and EU levels.” Therefore, though it is likely that private equity (and hedge funds) will continue to be monitored, and despite the tough rhetoric cited in the press, Echarrí remained confident that, as long as measures such as the Walker guidelines prove to be effective, the Commission will stop short of drafting new legislation.

Indeed, private equity has come out in a positive, even encouraging light. In a speech given at a recent plenary session, European commissioner Charlie McCreevy stated that neither private equity nor hedge funds are to blame for the current upheaval in the financial markets, instead suggesting that it is the regulated sector that has caused the current difficulties. He was even quoted as saying that without private equity and similar asset classes, Europe’s recovery from today’s turmoil will be slower.

What should be expected in the next few months is a series of regulatory proposals targeting the financial service sector at large. In fact, according to Echarrí: “Private equity will be excluded from this, at least for the time being”.

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