Boris Johnson objects to plans to regulate hedge funds
EU plans to regulate hedge funds are a "blatant attack" on London's role as an international financial centre, the mayor of the city has said.
Boris Johnson added that suspicions ministers in Paris and Berlin were using the proposals to deliberately target London were "not unfounded".
Mr Johnson fears hedge funds will move outside the EU if made to be more open.
After lobbying in Brussels, he said the draft European directive was still in its early stages and would be amended.
"I hope it will be improved in the interests, not just of London but in the interests of Europe as well," he said.
Hedge funds use sophisticated, complex investing strategies to make returns, even when markets are falling.
Under the EU plans, they would be required to be more open and their ability to borrow would be limited.
London is currently the home of 80% of Europe's hedge funds, but they could be tempted to move to Switzerland and the US, the mayor argues, saying the directive would penalise all of the UK, not only London.
Hedge funds have been blamed for contributing to the financial crisis and threatening future financial stability.
The mayor said there was "no suggestion or evidence" that hedge funds were in any way to blame for the financial crisis, making heavy regulation difficult to justify.
But the European Commission has said its proposals are necessary "to overcome gaps and inconsistencies in existing regulatory frameworks at national level" and that they will "improve the macro-prudential oversight of the sector and [allow governments] to take co-ordinated action as necessary to ensure the proper functioning of financial markets".
After meeting with Charlie McCreevy, the head of internal markets for the European Commission and senior members of the European Parliament, the Mayor said there was a strong case for regulation, but that it should not be at the expense of London's competitiveness
Earlier Mr Johnson told the BBC: "It's always open to people to construe it as a naked attempt by Paris and Berlin to attack the competitiveness of the City of London.
"I do think that people who are suspicious of the motives of some of the other European governments in seeming to want to apply this directive in the way that they have - those suspicions in my view are not wholly unfounded."
The Alternative Investment Management Association, which represents hedge funds, says that UK firms account for about a quarter of the global hedge fund industry and that British hedge funds currently have £250bn ($400bn) of assets under management.
The association claims that the hedge fund industry contributes around £10bn in taxation to the Exchequer.
Stuart Fraser, chairman of the policy and resources committee at the City of London Corporation, who joined Mr Johnson in Brussels said that "any legislation needs to do the job it sets out to do".
"Others have said that the draft directive is unsatisfactory and we're very unhappy with some key parts of it.
'If it goes ahead unchanged it will be narrowly protectionist, fail to take account of other global players including the US, and damage an important EU industry."
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.