* Mutual fund managers must defer bonus under new rules
* Law could be in place as soon as late 2015
* Rules not as strict as bankers' bonus cap in Europe
By John O'Donnell
BRUSSELS, Feb 25 EU lawmakers and member states
agreed curbs on fund managers' pay similar to new rules for
bankers on Tuesday, including a three-year deferral of 40
percent of bonuses, legislation that could be in place next
The rules also stipulate that half of any cash bonus be
spent on a stake in the fund manager's investment fund.
"We want to ensure that responsible remuneration policies
are in place across the financial sector and that there are no
loopholes for risky and dangerous trading practices," said
lawmaker Arlene McCarthy, who also worked on banking pay curbs.
"The new rules will bring funds in line with EU bankers
bonus rules, as there will be no guaranteed bonuses for fund
managers and 40 percent of bonuses must be deferred," she said.
Member states have up to 18 months to introduce the law once
it is formally signed off - likely in the next few weeks.
The rules are not as strict as those applied to bankers,
which cap bonuses at the level of their annual salary. Some
lawmakers had wanted tougher curbs but many EU countries were
opposed, one person involved in the negotiations said.
The rule change will encompass mutual funds operating in the
bloc, which have about 6 trillion euros ($8 trillion) under
management, but not affect hedge funds or private equity
investors, governed by different law.
European regulators now have to decide which staff at mutual
funds should be covered by the rules, which may be the
precursor to stricter and wider restrictions on pay in finance,
possibly in future including remuneration at hedge funds.
EU lawmakers have also said they want to impose the same pay
limits on managers of money market funds in a draft law making
its way through the European Parliament.
The rules also envisage bolstering the role of a so-called
"depositary" to oversee fund assets. Any fund falling foul of
the new rules would face fines of up to 10 percent of turnover.
"Today's deal will deliver greater protection for investors,
as well as taking steps to reduce reckless risk taking in the
investment fund sector," Sven Giegold, a German lawmaker
involved in the negotiations, said.
"The stricter rules on depositaries will ensure fraudulent
schemes, like the (Bernard) Madoff case, cannot occur in
Europe," he said, referring to the firm that collapsed in 2008,
revealing a fraud that cost investors an estimated $17 billion.