Ed Miliband wants hedge funds to pay tax on UK shares that they trade. Well they do already. What he also wants them to do is to pay stamp duty on the positions that they take. They avoid that because of some thing called "intermediaries relief".
Intermediaries relief was introduced in the 1990s to allow investment banks to act as so-called market makers, buying and selling shares for clients, to increase the amount of liquidity, or the ease of buying and selling, in the UK stock market by reducing transaction costs.
Labour argues that this exemption has been exploited by hedge funds, which frequently opt to enter into financial contracts with banks that give them an economic exposure to shares, rather than buying the underlying shares themselves.
Because the hedge funds enter into derivatives contracts with banks, the banks' share purchases qualify for intermediaries relief whereas the hedge funds trade only in derivatives, no stamp duty is payable.
The hedge fund's position seems fair enough. they didn't buy any shares, so no changes to the sare register for their trades and therefore no stamp duty.