EU watchdog backs 'passport' for U.S. hedge funds in Europe

LONDON (Reuters) - Hedge funds from the United States, Singapore and Hong Kong should be allowed to continue marketing themselves in the European Union, the bloc's financial watchdog said on Tuesday.

The long-delayed recommendation from the European Securities and Markets Authority (ESMA) to the EU's executive European Commission for endorsement is a taste of what Britain's financial services sector might face after it leaves the bloc.

A new EU law requires ESMA to say for the first time if hedge fund rules in non-EU countries are as strict as those in the 28-country bloc.

A positive view means that asset managers based outside the EU get a "passport" to continue offering services to investors across Europe, replacing a system of country-by-country private placement authorization.

ESMA also gave the green light to hedge funds from Canada, Guernsey, Japan, Cayman Islands, Jersey, Australia, and Switzerland.

(Reporting by Huw Jones; editing by Jason Neely)

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