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“Private equity does not give rise to the macro-prudential or systemic concerns which are the driving force behind much of the post-crisis regulatory agenda”, Commissioner McCreevy said. It also should not be lumped together with other categories of leveraged financial institutions, he underlined. We must not shackle the private equity industry with regulatory constraints that are neither necessary nor productive.
Although self-regulation has ‘lost some credibility in recent times’, Commissioner McCreevy believes that self-regulation represents the most promising avenue for ‘promoting the desired behaviour’ by private equity managers. McCreevy refers to the G20 declaration that calls on regulators to first look to the industry codes and best practices before considering the need for any regulatory intervention.
“I will therefore press ahead with a review of the scope, content and performance of the relevant codes of practice that the European private equity industry has introduced”, he said. A report to the European Parliament is planned for March 2009.
The types of issue the Commission will focus on include the coverage of codes, monitoring and mechanisms for promoting compliance, and consistency across Member States.