国际英语新闻：EU moves for tougher financial regulation

BRUSSELS, April 29 (Xinhua) -- The European Commission took a series of actions on Wednesday to tighten financial regulation in the European Union (EU) as a response to the current financial crisis.

    It proposed tougher rules for hedge funds and private equity funds, which would be subject to appropriate authorization and registration requirements if they want to operate in the EU.

    "There is now a global consensus over the need for closer regulatory engagement with this sector. In particular, it is essential that regulators have the information and tools necessary to conduct effective macro-prudential oversight," said EU Internal Market and Services Commissioner Charlie McCreevy.

    The draft law is an important part of the EU's response to the financial crisis, aimed to create a comprehensive and effective regulatory and supervisory framework for hedge funds and private equity funds, which amounts to around two trillion euros (2.6 trillion U.S. dollars) in assets at the end of 2008.

    Only funds managing a portfolio of more than 100 million euros (130 million U.S. dollars) will be subject to the new rules, which imply that roughly three percent of hedge fund managers, managing almost nine percent of assets of EU domiciled hedge funds, would be covered.

    They would be required to register and disclose information on leverage to supervisors.

    The commission said the proposed rules would ensure that all regulated entities are subject to appropriate governance standards and have robust systems in place for the management of risks, liquidity and conflicts of interest.

    Fund based in a third country can be granted access to the EU market after a transitional period of three years. This should allow the EU to check whether the necessary guarantees are in place in the countries where the funds are domiciled.

    The commission also set out principles on remuneration of risk-taking staff in the financial services sector, a key reform after the financial crisis.

    In a non-binding recommendation, the EU executive arm urged member states to ensure that financial institutions have remuneration policies for risk-taking staff that are consistent with and promote sound and effective risk-management.

    It set out guidelines on the structure of pay, on the process of design and implementation of remuneration policies and on the role of supervisory authorities in the review of remuneration policies of financial institutions.

    "Up to now, there have been far too many perverse incentives in place in the financial services industry. It is neither sensible nor sane that pay incentives encourage excessive risk-taking for short term gain," McCreevy said.

    McCreevy said remuneration levels should continue to be based on performance, but performance measurement criteria should privilege longer-term performance of financial institutions and adjust the underlying performance for risk, cost of capital and liquidity.

    The commission invited EU member states to adopt measures to ensure that remuneration policies for risk-taking staff are consistent with and promote sound and effective risk management.

    In particular, financial institutions should be able to claim back already paid bonuses, where data has been proven to be manifestly misstated.

    Remuneration policy should be transparent internally, should be clear and properly documented and contain measures to avoid conflicts of interest. It also should be adequately disclosed to stakeholders.

    Supervisors should ensure that financial institutions apply the principles on sound remuneration policies to the largest possible extent and have remuneration policies consistent with effective risk management.

    The commission said it was ready to make legislative proposals to bring remuneration schemes within the scope of prudential oversight.

    Bank executives came under fire since they won huge bonuses even when the financial institutions they managed had to be bailed out by governments in the financial crisis.

    And the current remuneration policies in financial institutions were said to be a reason for bank executives to take risky decisions for short-term gains.

    The commission also on Wednesday unveiled further guidance on structure and determination of directors' remuneration, saying an appropriate remuneration policy should ensure pay for performance and stimulate directors to ensure the medium and long term sustainability of the company.

    It called on EU governments to set a limit on severance pay of directors and to ban severance pay in case of failure. Shareholders' oversight of remuneration policies should be improved.

    "Incentive systems for executive directors in listed companies have led too often to excessively short-term management actions and sometimes 'pay for failure'," McCreevy said.

    All there moves are part of the EU's ongoing efforts to strengthen financial regulation in order to prevent recurrence of the financial crisis. The EU has also been pressing hard for tougher financial rules on the global level.

    At a G20 summit in London early this month, leaders from the world's major economies agreed similar measures taken by the EU.