Alternative Market Briefing

French banks fear that parliament may decide to forbid them to work with hedge funds – Le Figaro

Monday, January 21, 2013

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Karine Berger Benedicte Gravrand, Opalesque Geneva: - Paris’ financial district is very concerned, French daily newspaper Le Figaro reported yesterday. The French finance minister Pierre Moscovici proposed rules last month that speculative activity be segregated away from banking activity. However, large French banks such as BNP Paribas, Société Générale and Crédit Agricole fear that the French parliament, under the counsel of Member of Parliament and economist Karine Berger, who is looking into the proposals, might toughen the rules.

Several sources told Le Figaro that Ms. Berger is looking into two different aspects of the proposal at the moment. The first one would consist in monitoring the relationship between banks and hedge funds ("fonds alternatifs"). There is a rumour that says the economist would like to forbid banks to work with hedge funds via a parent company, and restrain such operations to a separate (specially created under the new law) subsidiary. The second one would further restrain high frequency trading (HFT).

According to the paper, financiers are happy to discuss HFT, but are unhappy about any restraint in their business dealings with hedge funds, which many banks deem as essential. Bankers do not see hedge funds as hazards, but as investors who are useful to the economy, who often take long-term risks on non-plain vanilla assets. One banker told Le Figaro that when French companies recently issued convertible bonds, half of those were bought by h......................

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