Germany Bans Short Selling, Angers Hedge Funds

Germany has instituted a controversial ban on naked short selling, hoping to prevent speculators from disturbing the financial markets. Germany has banned naked short selling in some stocks, euro-dominated bonds, as well as credit default swaps--likely a reaction to the role of CDC's in Greece's debt crisis.

But funds say they make markets more efficient and the ban could create more problems.

"I think it's ridiculous," said Pedro de Noronha, managing partner at hedge fund firm Noster Capital, which invests in credit default swaps. "All it proves is how scary it is to have people who are unsophisticated in ... financial markets imposing regulations on products they don't understand."

The move bans naked shorts in some financial stocks and euro-denominated bonds, as well as related transactions in credit default swaps (CDS), which attracted controversy during Greece's debt crisis, although funds say they accounted for a fifth or less of activity in Greek sovereign CDS.

David Stewart, chief executive of high-profile London-based hedge fund firm Odey Asset Management, warned the move could create, rather than remove, dislocation in financial markets.

"This could be very frightening for everyone. Once you start interfering with the markets it leads to dislocation," he said. "If there's just soundbite politics ... and no real co-ordination it's very unsettling."

Source: www.reuters.com

Louis Bacon Listed as UK's Richest Hedge Fund Manager

An American hedge fund manager has claimed the top spot on the London's Sunday Times August "rich list." Moore Capital Management manager Louis Bacon’s is the UK's richest hedge fund manager with an estimated $1.6 billion fortune.

Moore Capital Management chief Louis Bacon’s £1.1 billion fortune placed him atop the list of the U.K.’s richest hedgies, edging out Sail Advisors’ Robert Miller, who took the top spot last year. Bacon’s wealth increased by 69% last year from £650 million; Miller’s horde rose 27% to £950 million from £750 million.

Bacon ranked 49th on the overall Times list, which included “the most” hedge fund managers “in recent years,” according Sunday Times editor Ian Coxton. In March, Forbes ranked Bacon as the 655th-richest man in the world, tied for 36th among alternative investments billionaires.

The head of the largest hedge fund in Europe enjoyed the largest percentage increase in his fortune last year: Alan Howard, founder of Brevan Howard Asset Management, saw his wealth more than double to £875 million, up from £375 million, good enough for 66th place on the overall Times list.

Source: www.finalternatives.com

London and Paris Square Off Over Hedge Fund Regulation

The UK, particularly its capital city, has been a staunch ally of hedge funds in the push back against regulation while other European Union countries such as France have been pushing for tough regulations on the industry. Now, the two countries are set to face off over the regulations--all within weeks of UK elections--and neither side looks willing to compromise.

Such a move is likely to escalate a long-running spat between Britain and France over how to treat foreign funds under the new regime.

Privately, Paris has threatened to use European Union voting rules to push through the law over the objections of Britain, said diplomats.

With London largely isolated on the issue, it would be easy for France to win the backing of a majority of European countries to sign off the law.

But this would break with European diplomatic practice where large countries like Britain are rarely bullied into accepting something they do not want.

Michel Barnier, the French commissioner in charge of an overhaul of financial services across the European Union, has intervened to head off a full-scale row between the two countries.

But at a meeting last week in Madrid, French economy minister Christine Lagarde told Barnier France was standing firm and would not concede to British demands that foreign funds be entitled to a license to do business across all 27 EU countries.

Source: www.reuters.com