Hedge fund consultancy Laven Partners has hit back at France's call for tighter regulation of hedge funds.
French finance minister Christine Lagarde has pressed for better controls on hedge funds plus higher capital requirements for banks with 'risky' hedge fund clients.
Speaking at the G7 meeting in Rome, Lagarde urged the EU to beef up control over hedge funds via prime brokers.
However, Jérôme de Lavenère Lussan, managing director of Laven Partners believes while there is a need to look at the financial industry in its entirety, the financial crisis started with the banks and "new regulations for hedge funds are not the answer".
He says there are plenty of internal hedge fund and proprietary trading activities in banks which seem to have been ignored by the proposals outlined.
"In the EU there is a strong regulatory framework, but it needs to be applied with more diligence and greater effort," says Lussan.
Rather than introduce new rules, he says governments need to ensure better understanding of the existing regulations and implement them more effectively.
"They should use whatever budgets are available to call for more internal and external audits of compliance rather than put tax payers' money into more legislation," says Lussan.
Simple solutions such as better enforcement will help clean up all abusive practices in banks or hedge funds. This would increase confidence rather than simply create more legal and economic uncertainty for our financial systems," he adds.
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