* Funds industry says investors could face extra charges
* Socialists say the rules a start but leverage cap needed
* UK lawmaker says rules not perfect but workable
(Updates with reaction, background)
By Huw Jones
LONDON, Nov 11 (Reuters) - The European Parliament approved new rules on Thursday to regulate managers of hedge funds and private equity groups from 2013, but stopped short of the industry's worst fears.
The bloc's assembly overwhelmingly backed the rules by 513 votes to 92 with 3 abstentions during a session in Brussels.
The package had already been agreed in October with EU states, which have joint say with parliament on the rules.
"The adoption of the directive means that hedge funds and private equity will no longer operate in a regulatory void outside the scope of supervisors," said Jose Manuel Barroso, president of the European Commission which drafted the measure.
It is the first EU law to directly regulate the sector, which although not seen as a cause of the financial crisis, was still believed to be too opaque and lightly regulated.
Managers of all alternative investment funds, which also include real estate funds and investment trusts, must register to operate in the EU, report data to supervisors and meet capital requirements.
Under centralised EU supervision, there will also be tougher rules on how a client's assets are safeguarded at depositories. [ID:nLDE6A9127]
The European Fund and Asset Management Association (EFAMA) said the regime will cover investments that were worth 1.85 trillion euros at the end of August.
The EU assembly beefed up the law by including pay rules and curbs on asset stripping on the private equity sector in a bid to stop them buying assets just for the short term.
The European Private Equity and Venture Capital Association (EVCA) said the rules were not costed and could have a serious impact on the financing of small firms and innovative companies.
The measure dovetails with global efforts to shine a light on all parts of the financial market -- the United States has approved similar rules on registration and reporting but the EU rules go further.
The new law affects hedge funds with over 100 million euros under management and private equity groups investing over 500 million euros.
BLACK HOLE FILLED
The new rules take effect in 2013, with a "passport" or EU marketing rights for non-EU funds not available until 2015 and until then national marketing regimes will continue but could be phased out in 2018.
Some 80 percent of the EU's hedge fund sector is located in London which is also Europe's main private equity centre.
Britain was locked in 18-month long negotiations with France who wanted a tough regime for non-EU managers.
Parliament's French socialist lawmakers said the "black hole of opaque hedge funds" will now be closed off.
"The regulatory battle is far from finished and we must now look to the next step. The use of leverage by hedge funds in particular must be controlled at the European level," Catherine Trautmann added.
A push to have fixed leverage caps for hedge funds ended in failure and the managers will set leverage limits themselves under but checked by regulators.
Syed Kamall, a centre-right lawmaker for London said the new rules will be costly but "protectionist" elements to stop non-EU funds from being marketed across the EU were rebuffed.
"This proposal is not perfect but it is workable," he said.
EFAMA's Director General Peter De Proft said a pragmatic approach was needed to implementing the complex new rules.
"Ultimately additional costs imposed on investment funds will negatively impact investor returns, which may drive investors to more lightly regulated products with weaker investor protection," De Proft said. (Writing by Huw Jones, editing by Mike Peacock/Giles Elgood)