Brussels, 21/06/2010 (Agence Europe) - Meeting on a weekly basis, the European Parliament and EU Council of Ministers are engaged in intense debate over the draft EU directive on hedge funds and alternative fund management. Progress seems to have been made on the directive's scope but the two institutions are still divided over the tricky question of how to deal with hedge funds and other investment funds from outside the EU. Last week, the European summit put pressure on the EU institutions to try and get the directive agreed upon before the summer break (see EUROPE 10162).
Backing the EP's view that a “European passport” should be granted, under certain conditions to non-EU hedge funds managed in or outside the EU, the European Commission suggests that national private investment schemes recommended by the Council should continue to operate in the first three years that the directive comes into force, following which period the approach recommended by the EP would automatically apply. The Council of Ministers opposes this compromise, only agreeing to examine the situation in three years' time but without prejudice to the decision to be taken at the end of the three-year period.
In a letter to the EU institutions, the American Chamber of Commerce (AmCham) says that “regulatory approaches in the EU, the U.S. and other countries should be coordinated to the extent possible. Any discrimination between EU and non-EU AIFs and AIFMs would limit the access of EU professional investors to investment opportunities while depriving EU companies of a much-needed source of capital. We believe a combination of approaches is required to ensure the full functioning of global markets. These two approaches should a) involve the continuation of the national private placement regimes (as set out in the Council text) and b) the possibility of non-EU AIFMs being granted a European Passport based on an equivalence determination (the Commission text) or an opt-in regime for the non-EU AIFM into the Directive (the Parliament text). In either case, the conditions applied should be objective, proportionate and reasonable. We have concerns regarding the potential impact of the proposed very extensive liability regime to be imposed on depository functions. Depositaries would be rendered liable even in circumstances that were beyond their reasonable control. It may lead some depositary service providers to exit the market, leading to a concentration of risk among a handful of firms”. (M.B./transl.fl)