The UK Treasury Minister attacks leverage caps but says UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say.
UK Treasury Minister Lord Myners worries about the protectionist impact of the directive and argued that “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”.
He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. On the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.
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