European Union economic affairs and finance ministers have reached agreement on the controversial proposed Directive on Alternative Investment Fund Managers, raising the prospect that the legislation could be finalised by a vote in the European Parliament next month.
The EU ministers found a compromise on the most contentious aspect of the directive, the rules governing access to EU markets for alternative fund managers and investment vehicles based outside the 27-member bloc.
The agreement will allow non-EU mangers and funds to obtain the same pan-European marketing ‘passport’ as their European-based counterparts two years after the directive comes into force, which is likely to be in 2013.
The current country-by-country private placement marketing arrangements will remain applicable for at least five years after the directive comes into force, but will eventually be abolished once the passport system is adjudged to be operating satisfactorily.
French concerns about the ability of outside funds to enter the European market through member states with less stringent regulatory regimes were assuaged through the two-year delay and a role for the future European Securities and Markets Authority (Esma) in protecting the integrity of EU financial markets.
However, the UK was successful in ensuring that non-EU managers who meet the terms of the directive will eventually enjoy the same ability to market their funds throughout Europe as those within the EU. London also saw off French efforts to give Esma wider powers to oversee the passport system.
The revised text will now go before a so-called trialogue meeting of representatives of EU member states, the European Parliament and the European Commission. If, as expected, it is approved, the legislation will go to a full session of the Parliament for approval at first reading in early November.
