EU finance ministers last night agreed their draft of the AIFM Directive despite the UK’s concerns that the regulations will damage the industry and harm the economy. Ministers must now work with the European Parliament, whose ECON Committee passed a differing version of the rules on Monday, to thrash out a final deal. The texts differ substantially on their provisions for non-EU funds, with the EP offering an EU-wide “passport” system, but under very strict conditions. On their part, finance ministers have opposed such a “passport”, instead demanding that fund managers register with national authorities in every EU country, which has worried countries including the US.
Rather than fighting a last-ditch battle over hedge funds, Mr Osborne wants to keep his powder dry for a much bigger debate next month over plans to create an EU-wide regulatory system for financial services. Barney Reynolds, a lawyer for Shearman & Sterling, says, “What really worries us is the plan to create a powerful pan-European financial regulator. That is the real battle we should be fighting.” In addition, a review of the next seven-year EU budget will begin later in the year, putting Britain and France on course for their regular battles over farm subsidies and the UK’s budget rebate.
Source: Open Europe
Here is a previous article from this blog that explains why the AIFM Directive is not a good text.