Talks on the Alternative Investment Fund Management Directive (AIFMD) came close to agreeing a final draft in Brussels on Monday, but yesterday dissenting politicians scrambled to arrange covert one-to-one meetings with other MEPs to talk them into toughening up the rules.
The French have not revealed the full text of their proposal. However, several sources said the rebels aim to abolish a planned “passport” for hedge funds, which would require some non-EU funds to meet transparency standards to trade here, and replace it with a stricter, universal benchmark.
“It felt a bit like when a phone company calls you up with a great new deal, but then they won’t tell you any of the details,” said Conservative MEP Syed Kamall, who has been involved in months of negotiations over the directive.
Kamall told City A.M. yesterday the breakaway group might have enough support to stop further progress. “The French are trying to undermine the Belgian presidency and form a blocking minority, and they claimed tonight to have done so.”
The acting EU finance minister, Belgium’s Didier Reynders, said yesterday he realised the crackdown did not command the support of every member state, but said he will not force through the current proposals.
The UK, which is home to 80 per cent of Europe’s hedge funds, has backed the introduction of a passport system.
Andrew Baker, chief executive of the Alternative Investment Management Association, said yesterday: “The French proposal could be calamitous for European investors who could be prevented from investing in funds or managers outside the EU, and non-EU hedge fund managers who would find it very difficult to access the European market. This would be a profoundly protectionist move.”