Proposed new hedge fund rules in Europe would limit access to the market for fund managers and custodian banks outside the EU, U.S. Treasury Secretary Timothy Geithner has argued. Nonetheless, the European Commission is pressing ahead with the new rules.

“The new hedge fund rules do not discriminate against foreign players and are not protectionist,” Amadeu Altafaj, a spokesman for the commission, told The Wall Street Journal.

European regulators reason that once a fund manager meets new standards to better protect investors, reduce risk and offer more transparency about their operations and investments, the hedge fund would have access to all countries in the EU.

But the U.S. argues the bar for the new standards is too high for outside managers and that it would, in practice, ban them.

Managers in London also have cause for concern since they often headquarter in the Cayman Islands or other offshore locations.

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