UK wants "improvement" on EU hedge fund rules

LONDON (Reuters) - Britain is committed to reaching an agreement on how to regulate the hedge fund industry with other European Union nations but wants to see further concessions, a government source said on Monday.

The official also said that while Britain does not want hedge funds to be given a free ride by regulators, policymakers needed to get the details right to avoid making Europe a less attractive place to do business.

EU finance ministers meet on Tuesday to agree a law to control hedge funds and Britain, which supervises 80 percent of Europe's hedge fund managers and 60 percent of private equity funds, is worried the rules could force out foreign hedge funds.

"We've made good progress with our EU partners in recent months, but there is still further scope for improvement," the source said.

"We remain committed to finding a solution and are confident we can find one that meets our concerns together with those of our European partners."

The U.S. has also voiced doubts about the EU's proposals but Britain has become increasingly isolated in Europe over the issue where many policymakers blame speculators and secretive funds for contributing to the financial system's woes.

"We're clear there's no free pass for hedge funds, but we need to get the implementation right," the source said.

"We've worked to improve the directive a great deal, but we still have significant concerns about how its implementation could impact on EU competitiveness."

The G20 group of developed and emerging economies has pledged to regulate all systemically-important institutions but hedge funds are currently dealt with by national regulators.

"Our absolute priority is stronger regulation that supports EU competitiveness and delivers on the G20 agenda," the source said.

(Reporting by Matt Falloon; editing by Ron Askew)