The Mayor of London, Boris Johnson, has warned that EU plans to regulate hedge funds could "strangle" the City as an international financial centre.
Hedge funds use sophisticated, complex investing strategies to make returns, even when markets are falling.
Under the EU plans, hedge funds would be required to be more open, and their ability to borrow would be limited.
The Mayor is concerned that if these rules are adopted, hedge funds will be driven to relocate outside the EU.
London is the current home of 80% of Europe's hedge funds, but they could be tempted to move to Switzerland and the US.
Hedge funds have been blamed for contributing to the financial crisis and threatening future financial stability.
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