The European Central Bank (ECB) published a legal opinion on the European Commission’s proposal to regulate alternative investment funds, including hedge funds and private equity funds. The proposed legislation would require fund managers to register with competent authorities and report certain details regarding their assets, short selling and other information. Given the possible risks of “regulatory arbitrage and evasion” by the industry, the ECB urged the Commission to “continue the dialogue with its international partners, in particular the United States, to ensure a globally coherent regulatory and supervisory framework.” The ECB also suggested several revisions to the proposal, including extending provisions on short selling to various market participants in addition to alternative investment funds, and clarifying the definition of “leverage” to include “specific leverage ratio concepts.” The text of the ECB opinion is available by clicking here.